It’s been a while since I posted about the potential for US VAT. The reason is simple – ‘it ain’t gonna happen any time soon’.
Professor Michael Graetz is the leading proponent of a federal consumption tax, and is still pushing his proposal.
He would impose a new national value-added tax and use the money, in part, to eliminate the income tax – and the filing of income tax returns – for families with incomes under $100,000. For others, there would be three marginal tax brackets (14%, 27% and, for income above $600,000, 31%.) He’d also lower the corporate tax rate to 15%, cut the payroll tax and give cash to low-income families with children. For more, see the full tax plan.
“It does not tear up the tax code and start over,” Mr. Graetz says. “It simply returns the nation to its pre-World War II tax system, where most revenue came from taxing consumption — then in an archaic way, through tariffs — and the income tax was limited to its proper function of providing tax justice through progressivity for folks at the very top. My proposal is designed to promote more economic growth without shifting the tax burden away from the top to families with less income.”