Categorized | Tax

Business Consumption Tax


The following is a Letter to the Editor from Tom Pauken, Chairman of the Texas Workforce Commission, that appeared in the New York Times on Feb. 6, 2011.  Click here to see the letter online.

To the Editor:

“Corporate Tax Code Proves Hard to Change” (news article, Jan. 28) asserts that replacing the current corporate income tax system with an 8.5 percent business consumption tax would mean “that the government would collect a much smaller share of a much smaller tax base.”

To the contrary, a recent study found that an 8 percent business consumption tax (or value added tax) would raise just as much in revenues as the existing corporate tax system.

It would be border-adjusted. All goods and services imported into the United States would be taxed at the 8 percent rate while all exports would get a tax credit.

Our current business tax system is the most onerous in the world. It exports prosperity and good American jobs overseas. Shifting to a business consumption tax would bring jobs home to America and rebuild our manufacturing base.

Tom Pauken
Texas Workforce Commission
Austin, Tex., Jan. 31, 2011


2 Responses to “Business Consumption Tax”

  1. Jim Eckland says:

    What’s wrong with a Tariff-revenue-System of 20- 25%. I don’t like the idea of rebating VATS on Exports.

  2. China Watcher says:

    Good point made by Tom Pauken. Most US corporations pay little or no corporate income tax — and often spend a bundle on lawyers and accountants to achieve that result. A consumption tax would not be so easy to avoid. It is more likely to reach importers, illegal immigrants and others in the underground economy, and the host of tax evaders and tax avoiders. Small wonder that 150 countries have found a place for it in their tax systems.


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