Allow me to object to the Drum–Klein–Yglesias consensus for a VAT to fund universal health care. The efficiency arguments for it are convincing, but I don’t think that’s enough to make up for its regressiveness and its stealth. Sure, as Matt says, “a universal health care program would be a highly progressive measure, so progressivity would continue to exist even given a somewhat regressive finance structure,” but that doesn’t mean that it would be still better to fund a progressive entitlement with progressive taxation. Sure, this is better than using a VAT to fund, say, union-busting, but it’s not as good as doing, say, what the Australians do: use an income tax surcharge which exempts low-income taxpayers.
Also, the VAT is problematic for reasons of democratic accountability. Allow McMegan to explain:
Just say no to the Value Added Tax. In theory, it’s a good tax. In practice, because it is extremely hard to tell what proportion of the price of anything represents the tax, it removes the good and natural pressure upon tax rates.
Look, I find the idea of a tax so easy to expand as to make funding new entitlements a piece of cake as attractive as the next person. But people have a right to know what they’re paying in taxes, and the VAT prevents that from happening.
Of course, I think we can all agree that funding the entire federal government using integrals would be the best solution. That way, my long hours doing anti-differentiation in calculus class last year wouldn’t be for naught.