Debt commission: VAT still an option
Posted on 26. Apr, 2010 by The One in Economy
First economic czar Paul Volcker said a Value-Added Tax should be considered. Then the Senate passed a resolution disavowing a VAT by an 85-13 vote. Then White House Press Secretary Robert Gibbs said a VAT was not being considered. Then Barack Obama refused to rule out a VAT in an interview with CNBC.
Yesterday, former Senator Erskine Bowles may have finally cleared up the matter.
Bowles, a former chief of staff in the Clinton White House, told Fox News Sunday that “the president looked Senator Simpson and me in the eye and he said, ‘Everything is on the table.’ So we are going to look at every single way to right this fiscal ship,” Bowles said. That includes cutting “sacred cows” and raising revenue, he added.
“We have to have everything on the table,” including a value added tax, Bowles said.
“I think there are many good arguments that you can make for a value-added tax or consumption tax, as opposed to a tax on wages. But I think it’s just one of the things that ought to be on the table that we ought to discuss. I’m not for taking anything off the table.”
Bowles refused to say if he personally thinks a VAT is a good idea. “I want to see the pros and cons discussed, and then I want to see us make some decisions and some hard recommendations.”
Bowles is the chair of Obama’s debt commission, which meets for the first time tomorrow. Two SEIU higher-ups, Andy Stern and Anna Burger, also have seats on the commission and will presumably argue against any spending cuts (and possibly in favor of a VAT).
Alan Simpson, the Republican co-chairman of the commission, will likely be more fiscally conservative. Simpson has said the only way to solve the debt crisis is to raise payroll taxes or cut entitlements and that the “rest of it is B.S.” He told Fox News Sunday that he would only support a VAT if action was taken against the federal income tax.
A Value-Added Tax is a national sales tax where the price is passed along to the consumer. VATs are popular in European countries. In the United States, sales taxes have always been imposed at the state level.
