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Comment by Ratufa | Hacker News Reader

Since, as the blogger put it, "The former communists running Russia apparently understand tax policy better than the buffoons in charge of U.S. tax policy.", he must be in favor of the US having a VAT, like Russia does.

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I'm not accusing you of this, but a common misconception I've seen from Americans is that VAT is "yet another tax." It's (usually) not. In California, I was paying 8.25% sales tax (and this can go up to 10.75% with some local sales taxes added) and in the UK I pay 17.5% but there are no sales taxes, and certainly not any "local" ones I need to be aware of. A can of coke that costs 60p in London costs 60p in Edinburgh too.

In the US, it might wind up being 'yet another tax' -- because neither income nor sales taxes would necessarily go away with the imposition of a VAT.

Most Americans who are A: informed enough to know about VATs and B: against their introduction here are concerned that it would be instituted as just another tax here. Resistance would be lessened if there was a credible promise to simplify the rest of the tax code (not eliminated, but lessened), but I don't know who has the moral authority to make such a promise right now, whereas I have a pretty clear idea who has the legal authority to institute a VAT. The motivation for it being discussed in the US is not for it to be a revenue-neutral modification to our tax code.

An additional problem with VAT is that it is mostly transparent to the people being taxed.

If you raise my taxes with VAT, I'll notice prices of assorted goods going up slightly, be too lazy to add up the various cost increases. If you raise my income taxes, I'll immediately notice that I'm $2000 poorer than I was before, and maybe I'll vote for the other guy.

Your argument is what I was thinking of when I said "not eliminated, but lessened". I'm against it for that reason too, but I am pretty sure many people are resisting simply because it would be a tax increase.

I also think that the stealth nature of the tax is the actual reason it is being discussed, but I figured that was getting political, and what I posted was fairly defensible on (relatively) objective grounds.

That isn't a "misconception", at least not wrt the US. As others have pointed out, a VAT is being suggested by some people as a way for the government to raise additional revenue. A typical argument (this from a libertarian-oriented economist) might be something like:

http://www.marginalrevolution.com/marginalrevolution/2010/02...

In the US, there are separate state and federal taxes. The sales tax in California is a state tax, whereas the VAT idea that's being floated would be a federal tax. That's why adding a VAT in the US would not supplant any existing sales taxes (or state income taxes).

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