Cato Scholar Calls for US Value Added Tax

John  Cochrane, a senior fellow at Stanford University’s Hoover Institution and an adjunct scholar at the Cato Institute, writes in The Wall Street Journal:

Soon the Trump administration and congressional leaders will unveil their tax-reform proposal...

[I]f our leaders were to attempt a really fundamental reform, they could break the political logjam. Changes must be simple, understandable and attractive to voters...


The best way to do this is to eliminate entirely the personal and corporate income tax, estate tax and all other federal taxes, and to implement instead a national value-added tax—essentially a national sales tax.

This is an absolutely horrific idea.

But he promotes an even more technocratic statist policy proposal on top of the VAT:

What about progressivity? It is easy to make a value-added tax progressive: In place of current exemptions, send everyone a $10,000 check. 

And what rate does he propose the VAT be at 3%, 5%, 10% maybe 15%? This is his answer:

Well, if the federal government is going to spend 20% of gross domestic product, the VAT will sooner or later have to be about 20%. 

Note well, Cochrane is a mechanic for the state. His op-ed does not mention cutting government spending. It is merely a shift in the manner of taxation, a shift that is particularly dangerous because it would be so easy to raise in the future.

Contrast this nightmare of a tax policy proposal with the sound tax proposal of Senator Rand Paul where he calls for a tax cut for everyone.

-RW