VAT's The Matter

Fiscal Policy: Sometimes the worst ideas are the most tempting. So it is with the value-added tax, or VAT — a potential money gusher for strapped governments but a massive new levy on all Americans.

At least twice a decade, it seems, desperate politicians latch on to the idea of a VAT as the best way to raise lots of money for their spending schemes. No wonder. Unlike our current system, a VAT would impose a uniform levy at each level of production, from raw materials to finished goods, so the revenue potential is huge.