{"id":541987,"date":"2010-04-23T11:07:41","date_gmt":"2010-04-23T15:07:41","guid":{"rendered":"http:\/\/www.theatlantic.com\/business\/archive\/2010\/04\/the-tax-we-cannot-see\/39420\/"},"modified":"2010-04-23T11:07:41","modified_gmt":"2010-04-23T15:07:41","slug":"the-tax-we-cannot-see","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/541987","title":{"rendered":"The Tax We Cannot See"},"content":{"rendered":"

One of the principle conservative objections to a value-added tax is that it is “invisible” to consumers. In other words, we would go about our daily consumer lives, shopping and swiping our debit cards, without knowing that somewhere, deep inside the price tags, lives a phantom tax on various stages of the production cycle. They worry that it is harder to conjure emotional opposition to taxes you can’t see. That will make it easier for the government to raise revenue, which makes it easier for the government to finance its growth.<\/p>\n

Bruce Bartlett has a nice rejoinder<\/a> to this invisible tax\/money machine argument:<\/p>\n

\n

The VAT is a money machine<\/em>. This is probably the biggest
\nproblem most conservatives have with the VAT … To keep taxes low, they believe we should raise them in the most
\npainful and burdensome manner possible.<\/p>\n

In response, I would make three points. First, we will only enact a
\nVAT if we really, really need a lot of new revenue; i.e., a money
\nmachine.<\/b> If by some miracle Congress enacts massive spending cuts that
\nsignificantly reduce benefits for the largest, most politically
\npowerful and fastest-growing voting bloc in the country–the
\nelderly–thus preventing the need for higher taxes to avoid a financial
\ncrisis, then there is no need to consider a VAT. But that’s not going
\nto happen except in a libertarian fantasy world.<\/p>\n

Second, it’s not true that VATs always rise once implemented. Of the
\n29 members of the Organization for Economic Cooperation and Development
\nwith a VAT–the U.S. is the only country without one–four have never
\nincreased their VAT rates and seven others have reduced theirs over
\ntime. The average VAT rate in the OECD is actually lower today than it
\nwas in 1984: 17.61% today vs. 17.79% then.<\/p>\n

Third, it is critical to differentiate between those countries
\nenacting VATs before the great inflation of the 1970s and those not
\ninitiating one until after. The first group did raise their VAT rates a
\nlot by piggybacking on inflation. But in the era of relative price
\nstability since the 1980s, there is little evidence that the VAT is a
\nmoney machine. In the 17 countries enacting VATs since 1977 the average
\nrate increase is less than a percentage point.<\/p>\n<\/blockquote>\n



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One of the principle conservative objections to a value-added tax is that it is “invisible” to consumers. In other words, we would go about our daily consumer lives, shopping and swiping our debit cards, without knowing that somewhere, deep inside the price tags, lives a phantom tax on various stages of the production cycle. They […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-541987","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/541987","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=541987"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/541987\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=541987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=541987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=541987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}