The "VAT", the so-called value-added tax, has received some attention here before at Don't Quit Your Day Job. Unfortunately for everyone, it probably will receive a bunch more in the future. Fresh off Paul Volker's comments to the New York Historical Society putting the VAT in play, the United States could be getting a VAT of its own. The US is the only county in the OECD that doesn't have a Value-Added Tax.
Unfortunately, "doesn't" does not equal "will not". The massive increase in debt in the last years coupled with a breakdown in the tax base means new revenue has to come from somewhere. Enter the Value-Added Tax, a regressive (it will take more from the lower and middle classes - it taxes consumption) tax which has proven effective worldwide for generating the revenues needed to run massive government programs. From the article: "41% of the increase in tax revenue for the EU15 between 1970-2007 was due to the increase in the VAT."
Any new responsibility the government takes on has to be paid for by someone under that government. Anytime we load the government up with new entitlement programs, the government has to figure out a way to pay for the new responsibilities it has undertaken. With the entitlement programs we have now the VAT is in play. The VAT isn't the end of the battle, however... it can always be increased.
