Value Addded Tax (VAT)

One proposed solution to America's fiscal deficit problems (they're many---there may be failure of imagination---but never of answers) is imposition of thirty-percent value added consumption tax (VAT), with a repeal of all other federal taxes---income, employment and estate. How VAT works (most countries already have VAT taxes) is: a flat excise tax is imposed at each stage of production, rather than at the final retail distribution, as is done with sales tax. Because VAT is consumption tax, rather than an income tax, it keeps inflation low and discourages credit debt accumulation. Some items, such as housing, medical care, education and groceries, are normally excluded from VAT taxation. It's also a simple tax to administer and to audit, because of its flat rates of taxation. VAT taxation encourages greater efficiencies in production of goods and from a conservative viewpoint, VAT is a far better tax structure, provided the income tax structure and employment tax structure are repealed: the worse things any state may wish to penalize within its economy are the production of income and greater employment, which the imposition of both income and employment taxes certainly does. If a state must tax, a VAT is the better way to go.