Yet More VAT

A couple of days ago the New York Times reported that House Democrats were considering a VAT (a tax similar to a national sales tax) as a partial funding source for national healthcare.  Today AP reports this again.  Jon Cohn is pleased.  Ezra Klein isn’t.

I continue to think this isn’t a serious possibility.  The VAT is just one of half a dozen potential revenue sources that Ways & Means is considering, and in the end my guess is that the others are far more likely to be approved than a VAT.  But I’m happy to see this on the table anyway.  One of these days I think we’re going to need a VAT as a funding source for healthcare, but it’s not going to happen until the ground has been prepared and it morphs from being viewed as an outré piece of European socialism to being just an ordinary and familiar option to argue over.  It’s an Overton window kind of thing, and the sooner it gets started the better.

Bruce Bartlett has more on the VAT here and here.  I’ve written about it here. Properly constructed, it’s transparent, reasonably progressive, able to raise significant sums, and economically efficient.  It’s worth trying to give it a higher profile.

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