Number: RL33619
Title: Value-Added Tax: A New U.S. Revenue Source?
Authors: James M. Bickley, Government and Finance Division 
Abstract: In the 110th Congress, some Members of Congress are expressing interest in examining the feasibility of levying some form of a value-added tax as a way to reform the tax code or finance national health care. Representative Burgess introduced H.R. 1040, which would allow taxpayers to select a flat tax, a modified VAT based on the concepts of Robert E. Hall and Alvin Rabushka, as an alternative to the current income tax system. Representative Phil English's proposal (H.R. 4159) would replace our corporate income tax with a subtraction-method VAT and our individual income tax with a consumed-income tax. Senator Richard C. Shelby's proposal (S. 1040) and Senator Arlen Specter's proposal (S. 1081) would replace individual and corporate income taxes and estate and gift taxes with a flat tax based on the Hall-Rabushka concept. In addition, in the 110th Congress, Representative John Dingell introduced H.R. 15, which would levy a VAT to finance national health insurance. Furthermore, some advocates of a VAT argue that this tax is needed to meet the long-term revenue requirements of the federal government.
Pages: 32
Date: January 3, 2008