The U.S. unilaterally cuts tariffs when signing trade agreements.  Yes, the other countries say they are cutting tariffs, but 140 of our trading partners impose a 17% VAT-tariff on our goods exported to them.  Forever.

A value added tax is a form of consumption tax.  Other countries can legally impose their consumption tax on our goods sold to them.  We can't impose our income tax on their goods sold to us.

We should consider a consumption tax for many reasons, including the trade deficit.  Huckabee is proposing a consumption tax, dubbed the "Fair Tax."   Americans for Fair Taxation are the major proponents of the Fair Tax. 

The Boston Globe has a major piece on Huckabee's tax proposals today.  The reporter, Brian Mooney, points out the major problems - perceived lack of progressivity and strictly partisan support, i.e. Republicans only.  No mention of the trade benefits of such a tax.  But the proponents also want to repeal the 16th Amendment, the amendment allowing income tax collection.

The Coalition for a Prosperous America supports consideration of an American VAT tax for the trade benefits.  Progressivity needs to be, and can be, put into an American VAT.  The 16th Amendment need not be repealed, because a VAT can exist with an income tax or be phased in.  Bipartisan support should be cultivated assiduously. 

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written by Burl Finkelstein , January 02, 2008

The VAT issue has amazed me in how the "free trade" advocates can say we negotiated great mutually benifical trade agreements. We give zero tarriffs and not taxes to trade partners but allow them to tax our imports to thier country. You could not hire our trade negotiators to sell cars for you as they would send you into bankrupcy.

If, as many say we are going to export out way out of the current trade crisis, we certainly set ourself up to fail. In teh case of China we have a double whammy. Not only do they charge a 17% (or more) VAT on US inports but they skew the diferential by paying a tax rebate to exports intot he US. In reality they are taxing our products and giving the procedes to thier compaines who we are competeing against.

I am certain the US trade negotiators were skilled professionsals that knew exaclty what they were doing. However, the merrits of thier actions is lost on me. As a US wage earner who is now competing globally for my home market, I am not a benificiary of the agreements.

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