There Are some politicians who have called for the US to have a VAT like most...

There Are some politicians who have called for the US to have a VAT like most of europe does. what is a VAT, how does it work, should the US implement one? why would a politician like a VAT

Expert Solution

A Value Added Tax(VAT) is a type of tax that consumers have to pay on a product at any stage of production or distribution in the supply chain.

As the name suggests, a VAT is pre decided as a percentage of the marked price of the product, that a consumer has to pay. It is the extra value that a business adds to the good or services that is charged on each stage of production in a supply chain.

Enforcing a tax on the outset might seem like a good idea for the United States to increase government revenue, but there are some major disadvantages :

Costs incurred by businesses to collect , maintain and send tax proceeds to the government
Political negotiations between federal government and states
VAT is regressive in nature

Politicians who are interested in helping the government reduce budget deficits through extra revenues , are the ones who would generally prefer the introduction of a VAT, as it does act as a good source of revenue for the government.

Rahul Sunny answered 2 years ago

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There Are some politicians who have called for the US to have a VAT like most...

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