There are countless stupid ways to raise more tax revenue but really just three intelligent ways. First, introduce a carbon tax; second, broaden the base of the income tax; third, design a national sales or value-added tax. In principle, each by itself, carried to an extreme, could close the gap. But it would be better to combine two or even all three approaches so that the rates of each tax would be lower for any amount of revenue raised.
We would need a VAT at close to European levels — 10 percent or more — if that were the only change. That would be quite a jolt. It would be easier to swallow, say, a 5 percent VAT together with a small carbon tax and a moderate broadening of the income-tax base. For further sweetening — not to mention, added economic efficiency — a revenue-boosting package of that kind could be designed around lower income-tax rates and more generous income support for the working poor.
I would dispute the idea that higher taxes on high-income Americans is “stupid” but I agree with the general spirit of the column that a broader tax base is desirable. But I don’t understand what the case for VAT as opposed to a carbon tax is. Whatever distributive concerns you might have about a carbon tax seem more-or-less the same for a VAT, and whatever efficiency gains accrue from taxing consumption rather than income seem more-or-less the same for a VAT. But specifically taxing the carbon content of consumption has added ecological benefits (climate, obviously, but also on particulates). So why “a 5 percent VAT together with a small carbon tax” instead of just a carbon tax high enough to raise whatever amount of money you would get with a 5 percent VAT together with a small carbon tax?