Bruce Bartlett and the VAT
Until 2003, I was strongly opposed to a VAT mainly because I saw it as a “money machine” that would raise too much revenue too easily, thus fueling an expansion of government. Following are some of my attacks on the VAT.
Bruce Bartlett, “Revenue-Raising Redux: It’s VAT Time Again,” Wall Street Journal (August 2, 1984).
Bruce Bartlett, “The Case Against a Value-Added Tax,” Heritage Foundation Backgrounder No. 468 (November 5, 1985). Online here.
Bruce Bartlett, “Not VAT Again!” Wall Street Journal (April 16, 1993).
Bruce Bartlett, “Why a VAT Won’t Help U.S. Trade,” Wall Street Journal (August 30, 1993).
Bruce Bartlett, “How VAT Taxes Can Creep Up on You,” Washington Times (August 21, 1995).
Bruce Bartlett, “A Texan Take on Taxation,” Financial Times (September 1, 2000).
Bruce Bartlett, “Is There a VAT in Our Future?” Weekly Standard (June 4, 2001).
Bruce Bartlett, “Be Wary of the VAT Option,” Washington Times (October 30, 2002).
I started to change my mind in 2003 when a Republican Congress and George W. Bush rammed the Medicare drug benefit into law. At this point, I realized that it was no longer possible to restrain the growth of entitlement programs before it was too late. This led me to conclude that a massive tax increase was inevitable. I expressed my views on this topic in the following forums.
Bruce Bartlett, “Deficit Pressure Points,” Washington Times (October 20, 2003): “It is simply unrealistic to think a large deficit reduction plan can rely solely on budget cuts. Revenues will be on the table.”
David Wessel, “View from the Right: Tax Increases Ahead,” Wall Street Journal (February 19, 2004). I am quoted as saying, “These tax increases, when they come, are the result of conscious, deliberate decisions this administration has made.”
David R. Francis, “With Bush in Charge, Taxes May Still Rise,” Christian Science Monitor (March 19, 2004).
Bruce Bartlett, “When Push Comes to Taxes,” Washington Times (June 28, 2004).
Bruce Bartlett, “When Tax Cuts Lose to Spending,” Washington Times (July 25, 2004).
Bruce Bartlett, “The $250 Billion Tax Trap,” Fortune (August 9, 2004).
In August of 2004, I concluded that the magnitude of the tax increase that ultimately would be necessary to stabilize our national finances was too great to be achieved through higher income taxes. Tax rates would have to rise to levels that would have seriously negative effects on the economy. Therefore, we had to seriously consider the VAT because it has a long record of being able to raise substantial revenues at relatively low deadweight cost (the lost output over and above the tax take). In other words, we now needed a “money machine.” Following are a few of the places I have explained my new thinking about the VAT.
Bruce Bartlett, “A New Money Machine for the U.S.” Los Angeles Times (August 29, 2004). Online here.
Bruce Bartlett, “Tax Advice for Mr. Bush: Consider the VAT,” Fortune (December 13, 2004). Online here.
Bruce Bartlett, “Agenda for Tax Reform,” Tax Notes (December 13, 2004). Online here. This is a paper that was commissioned by the Ripon Society that I cannot now find on its web site.
Bruce Bartlett, “Want Reform? Talk to Bill,” Fortune (February 21, 2005).
Bruce Bartlett, “VAT Isn’t ‘Money Machine’ That Many Critics Maintain,” Investor’s Business Daily (March 11, 2005). Looking more carefully at the data, I concluded that the “money machine” problem mainly resulted from the inflation of the 1970s, which made it too easy for governments to raise VAT rates without much notice. During periods of low inflation, there was no evidence of rising VAT rates.
Bruce Bartlett, “Feed the Beast,” New York Times (April 6, 2005). Online here.
Bruce Bartlett, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (New York: Doubleday, 2006): chapter 9.
Bruce Bartlett, “VAT Time?” Forbes (June 5, 2009). Online here.
Bruce Bartlett, “Support the VAT,” Forbes (October 23, 2009). Online here.
I would like to strongly emphasize that I have not flip-flopped; I changed my mind in light of changed circumstances and further thought.