05/14/2010 05:19:00 PM EST
VAT vs. The Bag Lady
Some readers argue passionately against a Value Added Tax (VAT) on the grounds it flunks what they call the "Bag Lady Test." I'm guessing many of you haven't heard of the Bag Lady Test. It's not something they teach in LLM tax programs, but it's quite real. It goes like this: Any tax that a bag lady would have to pay is morally abhorrent and must be vigorously opposed.
VAT flunks the Bag Lady Test. No doubt about it.
You see, VAT isn't so much cruel as it is blind -- blind to the identity of market participants. VAT does not hate the poor; it simply refuses to recognize a consumer's identity, status, or circumstances.
If your quest is progressivity, look elsewhere. If your need is revenue, look to VAT.
View the VAT Bastard's opinion in its entirety on TAX.com.