There's a little dissembling going on when Grover Norquist consistently uses the VAT and a federal retail sales tax interchangeably.
Of course, you could argue (and Norquist does) that a retail sales tax will inevitably become a VAT.
This is because a VAT is capable of dealing with the many administrative problems I have outlined.
The VAT is an economically neutral tax and therefore will improve economic efficiency.
A VAT would improve our competitive performance in a global economy.
A VAT would improve our savings rate and would encourage capital formation.
However, a cross-country analysis of OECD data for twenty-three countries shows that saving rates are not higher in countries that rely more heavily on a VAT for revenue.
ONE ADVANTAGE that many supporters cite for substituting a VAT for income taxes is that a VAT - as a tax on consumption - would stimulate the saving rate in the U.
Therefore, in the United States, we may be able to gain the traditional advantages of a VAT without having to suffer the political disadvantages of adopting a tax on consumers as such.
While Treasury officials openly advocate tax integration, no one in the Administration will even talk about a VAT or any other additional tax.
Although conceding the VAT was a definite positive option, the report also stated that there would be problems in adopting such a tax, including likely opposition at the state government level and the need for "an elaborate and detailed" new tax administration system.
She also argued that a VAT is regressive in nature and would be inflationary.