Wednesday, January 27, 2016

Attention Rand Paul and Ted Cruz: A Value-Added Tax is a Terrible Idea

By Diana Furchtgott-Roth

The misguided valued-added tax seems like a magic money-making bullet to the nation’s deficit problems. The Tax Foundation estimates that Sen. Ted Cruz’s 16% VAT would net $25 trillion over the next decade. Sen. Rand Paul proposes a 14.5% “business activity tax” that would operate much like a European value-added tax, or VAT.

But once the VAT is put in place, it is practically impossible to get rid of it. In countries that have it, the VAT rises over time incrementally and gives government immense power. Cruz and Paul are in favor of smaller government, but their suggested VATs would expand government clout.

VATs harm consumers through increased prices and broader tax bases. Although Cruz and Paul suggest it as a substitute for other taxes, in advanced countries, parliaments, congresses, and assemblies don’t get rid of other taxes. They add the VAT on top of existing levies...

Unlike state sales taxes, VATs are charged in small amounts along the entire supply chain. The final tax is hidden... Due to their hidden nature, VATs tend to grow over time, and 26 of the 33 advanced nations with VATs have raised their rates.

From 1975 to the present, VAT rates have risen in the U.K. from 8% to 20%. In Norway, they increased from 20% to 25%. These taxes are in addition to European income taxes that are relatively high by American standards.

For instance, when imposed in 1967, Denmark’s VAT was 10%; it is now 25%, in addition to a top income tax rate of 56%. In 1968, Germany levied a 10% VAT. Germans are more fortunate; their VAT has risen “only” to 19%, and their highest income tax rate is “only” 48%...

Cruz and Paul make the VAT the centerpiece of their tax-reform plans. But America needs to move away from European policies, not towards them.

Read the rest here.


  1. Amazing how the governmental solution to defecits is always more revenue not less spending.

  2. Please cite any place where Cruz is calling his his tax proposal a VAT tax. Please, cite one - just one. **crickets**

    As far as I have read his tax proposal it is not value added. If you think it is, then post the details here. Don't claim it is value added when there is nothing cited to back up the claim. Seems like this is just more lies and deception being passed around, and EPJ spreading it too. It is true that VAT is evil, but Cruz' tax plan is not VAT.

    Again...Show us the exact details in his tax plan that are VAT... please. If anyone can.