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Comment by rayiner | Hacker News Reader

VAT is somewhat different in mechanics from sales tax, because it is collected along different points in the value chain. More important, VAT in Europe typically ranges from 20-25%, and has a broader tax base. In a typical European country, consumption taxes make up almost 30% of revenue, versus 17% in the US.

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So you're arguing for an increase of our sales tax. That's different than saying we don't pay sales tax!

Now, I don't disagree that a mechanism that tames American consumption would be good, and is also counter cycle to the economy.

But the question remains unanswered: How about the effect of sales tax on people and families at the margins [0]? 20-25% sales tax is a lot for them. A sales tax rebate check at the end of the year like Canada does? $70 hardly covers the bite of the sales tax!

[0] Including my in-laws, so I'll admit this is a bit personal.

A VAT is different than a sales tax. And families at the margins would be better off with the increased social services we could provide with a European-style VAT, than the pennies we could collect by fighting to tax corporations more than they do in Europe.

It’s a middle class cop-out. The American middle class says they want to help those at the margins, but they don’t want to pay 25% VAT on MacBook Pros. They’re only in favor of increased welfare if Jeff Bezos is the one who pays for it.

Indeed. The US could very well fund a generous welfare state like Europe, but that won’t be done by increasing taxes on the rich, but rather on the middle class (like in Europe).

There are more solutions than a high VAT, and since it is a regressive tax, it is actually a bad solution. The fact that some countries with high VAT use the funds better than other countries use their tax income does not make it a good tax. Of course corporate income tax can never solve all tax shortfalls, but it is still a reasonable piece of the puzzle.

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