It has its points. It may also be less prone to wild swings in government income, partly because it commends saving and investing. While classically, consumption taxes were assumed to be very regressive and also to make government revenues unstable, that may no longer be the case. Most households don't dramatically lower their spending even in downtimes - but they may consume different things. Add in that people will have more savings and investments anyhow, and it could be a fiscally sound move.

However, I very much oppose a VAT. They are vile, vile things. A giant headache for any business and a ridiculously easy way to crank up taxes without anyone noticing. A plague on any polity, they are. Plus, they can be a *nightmare* for service industries.

The real reason governments like a VAT over a sales tax:

A general economic idea is that if sales taxes exceed 10%, people start engaging in widespread tax evading activity (like buying over the Internet, pretending to be a business, buying at wholesale, buying products through an employer etc.) On the other hand, total VAT rates can rise above 10% without widespread evasion because of the novel collection mechanism.

while we are wishing, I want a pony.

What're the odds that any government will "transition" from Income to VAT? ASFAIK all other countries that went VAT, ALSO KEPT their income taxes... thus making it a royal mess.

Personally, I think that as a matter of stable govt. funding, income works better, because it isn't ties to consumer spending. If I decide NOT to buy lunch today, then the govt. is SOL. We can see in a recession, how quickly consumers pull back.

Oh, and? While I'm wishing for a pony, how about a govt. that doesn't spend money like water on stuff?

What SwissArmyD said. You know damn well that if we get a VAT, it's not going to be instead of the income tax.

I am all for the national sales tax instead of income. People who want to consume more pay more, people who consume less pay less. Talk about incentive to be "green". If satan himself ran for President on that platform, he'd have my vote.

Seems to me that arguing about a VAT (including variants like the so-called "Fair Tax") versus the Income Tax is like arguing over a condom versus no condom during a rape.

How about a flat tax on income, same percentage for everyone, with no deductions? No loopholes that are available only to those who can afford the sharpest lawyers, just flat across the board. Whaddaya think? I for one am tired of paying more taxes to the US government than Exxon Mobil does. I'm not the one who made 45.2 BILLION dollars in profit last year, yet I pay taxes and they don't. Grrrr.

While we're at it, I'd like to see all "outsourced" labor removed as tax deductions, too. Take jobs away from Americans and hire cheaper people in India if you want, but you don't get to write off the cost of the labor. Hire Americans, get the writeoff.

Swiss - right. Without the repeal of the 16th amendment, there should not be anyone putting ideas that VAT is acceptable in the minds (such as they are) of the Washington Political Class.

Steve - Corporations don't pay taxes, their customers do. So if Exxon finds a way to not pay taxes, their gas costs you less.

Conan is exactly correct. Governments like VAT because it is very hard to avoid (compared to a sales tax) and it is less obvious how much of the purchase is VAT. There are more games that can be played with VAT without them being obvious to the casual consumer - it has been way too long for me to remember exactly what they are.

Corporations don't pay taxes, their customers do.

That's true, but not the whole truth. So-called "corporate" taxes end up being paid by customers, suppliers, employees (executive and otherwise) and stockholders. Which of these pays what share of the total varies from company to company and day to day, depending on market conditions and supply/demand factors.

I agree with SwissArmyD, the VAT has rarely displaced income taxes in Europe. In fact, the VAT there created huge revenue sources that their social leaning governments then eagerly spent. Europe's average government spending was 30% GDP before VAT's were introduced. Now they average 50% GDP. Nothing to indicate that the US wouldn't travel down the same path.

I'm with Steve H. Let's introduce a flat tax and get rid of loop holes and the IRS. Just think how much money could be saved when the tax code fits on a 3x5 card.