The majority of countries in the world have implemented a Value Added Tax (VAT) - sometimes called a Goods and Services Tax (GST) - why hasn't the US?
- Most states already have sales taxes and value added taxes (VATs) are essentially a tax on sales.
- VATs are regressive, as they tax consumption rather than income and the poor consume a larger portion of their income.
- While businesses pay VAT to the government, they collect the money from their customers. Liberals prefer taxes that they can claim come from businesses and their owners to ones on employees and customers.
- A VAT reduces the value of savings, as part of the savings will be used to pay the VAT.
- A border-adjusted VAT is essentially a tax on imports, like a tariff.
- Countries with VATs tend to add them to existing taxes rather than replacing existing taxes with VATs. This leads to more taxes and spending.
United States specific reasons:
- Sales taxes are state taxes but a state could not charge a border-adjusted VAT due to constitutional limitations (states can't tax imports from other states). It would have to be a federal tax.
- The non-border-adjusted version taxes exports from one state to another. Most states do not want to do that, as it puts their goods at a competitive disadvantage with other states.
- Since sales taxes are state taxes and VAT is a federal tax, it would be complicated to reduce the (state) sales tax while imposing a federal VAT.
- Adding a federal law to raise taxes for a state is politically difficult. The politician gets the blame for the tax increase but doesn't get the credit for the spending. Politicians prefer the reverse, where they get the credit and someone else takes the blame. Or at least want to get the credit as well as the blame.
- Donald Trump thinks that it is too complicated.
One argument omitted from otherwise excellent answer by Brythan is that it - or rather, border adjustment tax that will probably accompany it - will possibly gut the retailers (especially cheap Wal-Mart type importers).
This is covered in a great detail (with specific math on how border adjustment effects work) in Vox's article "House Republicans are proposing a big corporate tax cut that Walmart hates":
That’s why retailers are revolting against the idea of border adjustment. As David French, the head lobbyist at the National Retail Federation, told Politico, “Our members have told us that the import tax could be as high as five times their profits. I don't know how viable some retailers would be in the face of this import tax."
Barney Jopson of the Financial Times reported, “Senior lobbyists who sometimes struggle to get the attention of company leaders told the Financial Times they were receiving calls from chief executives with orders to fight the tax plan, which some importers say threatens to wipe out their profits.” Walmart, Best Buy, Target, and Walgreens have all been meeting with Ways and Means Chair Brady’s office about the issue, according to Bloomberg BNA reporters Aaron Lorenzo and Kaustuv Basu.
Obviously, mostly this argument is made by importer retail industry - but it can be argued that it would have at least immediate negative impact on (frequently low income) consumers who depend on Wal-Marts of the country to buy cheap foreign-produced stuff.
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protected by Philipp♦ Oct 27 '17 at 12:52
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