January 14, 2016
The misguided valued-added tax seems like a magic money-making bullet to the nation’s deficit problems. The Tax Foundation estimates that Sen. Ted Cruz’s 16% VAT would net $25 trillion over the next decade. Sen. Rand Paul proposes a 14.5% “business activity tax” that would operate much like a European value-added tax, or VAT.
But once the VAT is put in place, it is practically impossible to get rid of it. In countries that have it, the VAT rises over time incrementally and gives government immense power. Cruz and Paul are in favor of smaller government, but their suggested VATs would expand government clout.
VATs harm consumers through increased prices and broader tax bases. Although Cruz and Paul suggest it as a substitute for other taxes, in advanced countries, parliaments, congresses, and assemblies don’t get rid of other taxes. They add the VAT on top of existing levies.
Read the full article at MarketWatch: Ted Cruz and Rand Paul have a terrible idea: a new tax