Could A Value-Added Tax Be Next?

President Barack Obama in an interview with CNBC Wednesday noted the possibility of a new value-added tax (VAT) is still on the table, although White House spokesmen insist it’s no longer being considered, the Associated Press reported. 

A VAT is normal in many European countries, which tax the value added at each stage of production on certain commodities-for instance, to raw products delivered to a mill, to the mill’s production work, and up the line to the retailer.

“I know that there’s been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It’s something that would be novel for the United States,” President Obama said during an interview with CNBC. He added, “I want to get a better picture of what our options are.”

Obama adviser Paul Volcker recently raised the prospect of a value-added tax, but the Senate voted 85-13 last week for a nonbinding “sense of the Senate” resolution that calls the tax “a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery,” the Associated Press reported.

After the interview, White House deputy communications director Jen Psaki said nothing has changed and the White House is “not considering” a VAT.

Volcker had noted taxes might need to be raised to slow the deficit’s growth, and that a value-added tax “was not as toxic an idea” as it had been in years past.

Since then, some GOP lawmakers and conservative commentators have said the Obama administration is considering a VAT.

 

 

 

 

 

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