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National sales tax debate begins to stir

May 27, 2009 at 12:33 PM
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WASHINGTON, N.Y., May 27 (UPI) -- Some key U.S. economic advisers have said a federal sales tax should be considered an option to help balance the books and pay for healthcare reform.

An unthinkable political option in years past, a budget deficit projected at $3.1 trillion over this year and next and a trillion dollar extension of national health coverage proposed by President Barack Obama have pushed a so-called value-added tax closer to serious national debate, The Washington Post reported Wednesday.

The chairman of the Senate Budget Committee Kent Conrad, D-N.D. has declared that "a VAT and a high-end income tax have got to be on the table."

Former Federal Reserve Chairman Paul Volcker has expressed cautious support for a national sales tax. White House Budget Director Peter Orszag has hired Ezekiel Emanuel, a strong proponent of a value-added tax as a consultant on healthcare reform, the Post said.

Orszag spokesman Kenneth Baer said the system, considered a regressive tax, "is popular with academics but highly controversial with policymakers."

"People are beginning to recognize that the mathematics of the current system are just unsustainable," said Yale Law professor Michael Graetz.

"A VAT has got to be on the table if you want to do something big and serious," he said.

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