Is a National Value-Added Tax On the Way? July 22, 2005 TF Staff TF Staff Is the President’s Tax Reform Panel preparing to recommend some form of a value-added tax? At least some experts are starting to think so. From Business Week: Most U.S. trading partners have a value-added tax. Supporters say that if the U.S. adopts one, it might attract more international investment and tax multinationals in a less complicated way. Backers also believe that shifting to a VAT would be much simpler for individuals, since most would no longer have to fill out tax forms. One version, which is being promoted by Michael J. Graetz, a Yale Law School professor and former top Treasury Dept. official, would set a VAT rate at roughly 14% of the cost of every product. That would produce enough tax revenue to fund a cut in corporate income tax rates from 35% to 20%. Graetz would keep the personal income tax, but he would set a single rate of 25% and get rid of many current deductions. For some idea of what a nationwide VAT tax might look like, check out Chris Atkins and Curtis Dubay’s Fiscal Fact on the only state-level VAT in the United States. Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for Federal Tax Policy Value-Added Tax (VAT) Tags Tax Reform