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Technology & Innovation

Value Added Tax?

Gary Becker and Richard Posner of the University of Chicago discuss the merits of a Value Added Tax as a replacement for income tax and a solution to American budget deficits.

Gary Becker and Richard Posner of the University of Chicago discuss the merits of a Value Added Tax as a replacement for income tax and a solution to American budget deficits. “The case for a VAT is that it is a relatively efficient tax that induces less distortion in behavior than say a progressive income tax that raises the same amount in revenue. On the other hand, once introduced the VAT almost always tends to rise over time, which increases the burden of government spending and taxation.”


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