Wednesday, October 14, 2009

The VAT tax cometh

Here's Harvard economist Greg Mankiw on the value-added tax:

Which brings us to Europe. Many European countries have both a VAT and a large government. But here is the hard question: which is cause and which is effect? Did the VAT cause government to become large, as VAT-opponents fear? Or did Europeans adopt large governments and then, needing to finance it, look for a relatively efficient way to raise a lot of revenue? I am inclined toward the latter hypothesis, but I will be the first to admit that it is entirely clear which way causation runs here.
By "here" Mankiw means the U.S.A. where a "feed the beast" mentality has locked us into entitlement spending that cannot be cut yet we can't afford.

Extra - Hot Air: "Bait and switch"

Just added - On Opinion Journal: "The dangers of a value-added tax."

No comments: