A European-style value added tax (VAT) proposed by lawmakers to reduce the federal deficit would cause the loss of 850,000 jobs and dramatically reduce retail spending, according to a new study prepared for the National Retail Federation by John Diamond, the Baker Institute’s Edward A. and Hermena Hancock Kelly Fellow in Public Finance; George Zodrow, Allyn R. and Gladys M. Cline Chair of Economics at Rice University; and Ernst & Young.
The report, released today, shows the potential impact of a 10.3 percent VAT, a form of sales tax used in more than 130 countries.
Read “The Macroeconomic Effects of an Add-on Value Added Tax” or learn more about the study from the Washington Post and the National Retail Federation.