Bring up the fact that trying to fund the federal government through a retail sales tax is a bad idea, and soon enough folks will pop up arguing that a VAT (value added tax) works in Europe and is arguably a good idea. And, indeed, that’s true. But they’re not the same thing. A VAT is what you come up with if you want to accomplish the goals of raising large sums of revenue through a consumption tax and you also know what you’re talking about.
My opinion on the merits of a VAT is as follows. A VAT is regressive, which I don’t like. But in many countries they raise a ton of money from a mildly regressive VAT and then spend the money on programs that are strongly progressive. This, to me, is fine — progressive taxes shouldn’t be a sacred cow, the point is to have an overall progressive system of economic interventions. So if you’re talking about a VAT to replace income tax revenue, I’m not so excited. But raising new money through a VAT and spending it on progressive programming seems like a fine idea to me if that turns out to be easier to accomplish politically than the alternatives.
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