which is better - a national sales tax or VAT??

This is an interesting news bit.

Former Chief of Staff to President Clinton, John Podesta, favors the use of a national value-added tax. A Value-Added Tax - VAT - is a tax that is applied to a product throughout its production. A car would have taxes added to it throughout the production process, such as the construction of sub-parts and parts to an engine, the transmission, frame, etc. would all be taxedd and then added to the price of the vehicle. Then the car would most likely also be charged a sales tax and possibly a luxury tax. The problem with VAT is that it becomes part of the cost of production, significantly raising the final retail price.

A VAT tax would not be so bad if all other taxes were eliminated. If they were, it would become somewhat similar to the concept of the Fair Tax. Thus only the consumer would be charged for the consumption of a manufactured item. Of course, the problem is that all of the taxes are hidden into the production costs and the consumer would never really know the actual cost of the product minus the added taxes.

In contrast, the FAIR Tax does eliminate ALL taxes - sales, income, property, etc. - and just charges a sales tax. The consumer has better information regarding the actual production cost of the product. The consumer pays taxes for only what he/she consumes. Purchasers of luxury items like motor homes, yachts, or SUV's would not be perceived as bad people owning expensive stuff. If you want to pay the sales tax on an item, so be it. Go to their web site for a better explanation. But it is a much better and fairer tax.

The problem with Mr. Podesta's suggestion is that the VAT would be in ADDITION to sales taxes. He advocates this to increase more federal government revenue. What this will obviously do is hurt the national economy by discouraging purchasing and result in reduced need of labor - higher unemployment.

He justifies his position saying that Clinton raised taxes on the rich in the 1990's and it resulted in large increases in revenues while also growing the national economy. That is FALSE! Clinton happened to be the beneficiary of circumstances, namely the explosion of the era of technology. Home computers, the internet, and the overvaluation of technology companies during this decade. Once some intenet-based companies died or were bought out by other companies, the economy came back to reality.

Don't buy into VAT. It will do as much to destroy the economy as cap and trade and health care reform.