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The Sales Tax, the VAT, and Taxes in Between--or, Is the Only Good NRST a "VAT in Drag"?

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  • Zodrow, George R.

Abstract

This paper examines the debate regarding the relative merits of the value added tax (VAT) and the retail sales tax (RST) in the context of fundamental tax reform in the U.S. It first reviews the current status of the debate, concluding that proponents of the credit method VAT are correct that it is superior to a standard RST, although some of their arguments are somewhat exaggerated. Passage of a VAT may, however, be politically infeasible in the U.S. The paper then examines two "VAT-type" modifications of the RST and compares the relative merits of the VAT and such a Modified RST.

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  • Zodrow, George R., 1999. "The Sales Tax, the VAT, and Taxes in Between--or, Is the Only Good NRST a "VAT in Drag"?," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(3), pages 429-442, September.
    • Handle: RePEc:ntj:journl:v:52:y:1999:i:3:p:429-42
    DOI: 10.1086/NTJ41789733
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    References listed on IDEAS

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    1. Murray, Matthew N., 1997. "Would Tax Evasion and Tax Avoidance Undermine a National Retail Sales Tax?," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(1), pages 167-182, March.
    2. Rudolf Klein, 1995. "Competing solutions: American health care proposals and international experience by Joseph White. Washington, D.C.: The Brookings Institution 1995. No of pages: 392. ISBN 0‐8157‐9364‐2 (hdbk) 0‐8157‐9," Health Economics, John Wiley & Sons, Ltd., vol. 4(6), pages 485-485, November.
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    Cited by:

    1. Kosonen, Tuomas & Ropponen, Olli, 2015. "The role of information in tax compliance: Evidence from a natural field experiment," Economics Letters, Elsevier, vol. 129(C), pages 18-21.
    2. Damodar Nepram, 2018. "Does VAT Necessarily Lead to Bigger Government Size? The Experience of States in India," South Asian Journal of Macroeconomics and Public Finance, , vol. 7(2), pages 240-259, December.
    3. Oz Shy, 2024. "Is Sales Tax Included in the Price? Consumer Inattention and Price Competition," FRB Atlanta Working Paper 2024-5, Federal Reserve Bank of Atlanta.

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