• February 8th, 2017

SIMPLE ECONOMICS QUESTION

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Many countries impose Value Added Taxes (VAT) as their principle means of generating national government revenues whereas the U.S. federal government uses income and payroll taxes for its principle revenue generators. Taxes on profits at the federal level are minor in comparison. VAT’s are taxes imposed at each stage of supply chains’ production processes where value is added at each stage of final goods’ and services’ production. Note a VAT is born by the purchasers of final goods and services as well. In 250 words and on the basis of tax efficiency and tax equity, would you prefer the U.S. government keep it’s income and payroll tax structure or convert to a VAT system and why?

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