Policymakers Float Federal Sales Tax Idea
American VAT long rejected as politically impossible policy
By Matt Cantor,  Newser User
Posted May 27, 2009 11:10 AM CDT
Senate Budget Committee Chairman Sen. Kent Conrad holds up a gavel before the start of a Senate and House budget resolution conference committee meeting on Capitol Hill in Washington, April 27, 2009.    (AP Photo/Susan Walsh)
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(Newser) – A federal sales tax has long been seen as politically off-limits, but the massive deficit has some in Washington pushing for it. “It's common to the rest of the world, and we don't have it,” a tax analyst tells the Washington Post. In dire times, “fundamental tax reform” may be needed, said the chair of the Senate Budget Committee. A VAT has “got to be on the table.”

Such a tax would mean paying more—perhaps as much as 25%—for everything from eggs to a lawyer, and it’s “hugely regressive,” the Post notes, hitting the poor hard. Supporters, however, say it could pay for universal health care, a big boon to lower-income Americans. A White House official said the tax isn’t a likely candidate to pay for health care. But “I think interest is quietly picking up," said a law professor.