Saturday, May 01, 2010

Pros/Cons Of Value Added Tax (VAT)

"Pros/Cons Of Value Added Tax (VAT)." In recent weeks, some leaders in Washington D.C. have been floating an idea of imposing a Value Added Tax (VAT). So what are the pros and cons of such a tax? On the pros side, a value added tax could raise billions of dollars of tax revenue in a short period of time. Under a VAT, the U.S. federal government would tax almost everything you buy by taxing the people who build, grow or produce things before those items reach the market. Some VAT supporters claim that U.S. debt will never be paid down without some kind of value added tax at the federal level. The biggest thing on the pros side of a VAT is lowering the U.S. federal deficit.

On the cons side, no American wants to see their taxes increased. Most experts state that the value added tax (VAT) is regressive in nature and if imposed it could drive the U.S. economy even further into recession. Also, politicians in Washington D.C. want to impose a VAT on top of our current income tax system, rather than replacing it. Almost everyone except extreme liberals believe that it is a huge con to place a large new tax on top of the current income tax system, because Washington will just spend all of that new tax money - rather than paying down the U.S. debt. There are more pros and cons of a value added tax (VAT), but in my opinion the cons far exceed the pros on this issue.

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