1. Want reform? Talk to Bill.
- Author
-
Bartlett, Bruce
- Subjects
VALUE-added tax ,ALTERNATIVE minimum tax ,TAX reform ,ECONOMIC competition ,SOCIAL security ,EXPORT duties ,COMPETITIVE advantage in business ,IMPORTS ,INCOME redistribution ,UNITED States legislators - Abstract
The article mentions Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, and discusses the benefits of a value-added tax (VAT). Thomas says it's going to be exceedingly difficult to reform Social Security and taxes separately. The President wants to establish personal retirement accounts so that younger workers will have ownership and control of some of their benefits. On the tax side, there is a pressing need to reform the alternative minimum tax (AMT) and improve the competitiveness of American businesses. Thomas, who's all for private accounts in principle, is wary about using Social Security money to fund them. As Thomas suggested on Meet the Press, we might use a value-added tax, or VAT. An enticing feature of the VAT is that it's rebated on exports and applies to the full price of imports, so foreigners pay for part of it. This mechanism arguably gives countries with a VAT a competitive advantage over those without one, such as the U.S., which is now the only major country on earth without such a tax. Enacting a VAT would also help address the nation's competitiveness problem if it is used to offset some or all of the corporate income tax, which cannot be rebated on exports under world trade law. Past efforts to enact a VAT have failed mainly because it's regressive, that is, it takes more from the poor than the wealthy in percentage terms. But rebating some of the tax into the personal accounts of poor people could redress this problem.
- Published
- 2005