Commentary: The VAT Lobby

At a June 21 meeting of the American League of Lobbyists, Charls E. Walker, chairman of the American Council for Capital Formation, predicted that the next President will impose a value-added tax, because he will want to “get a recession out of the way early.” Mr. Walker is as enthusiastic about value added taxes as he is about the resulting recession. In fact, he recently wrote to all members of the National Economic Commission, seeking support for a $90-billion VAT.

This uneasy case for a VAT begins with a familiar lecture in Calvinism: “At less than 2 per cent of gross national product,” writes Mr. Walker, “the U.S. rate of net domestic saving has fallen to a dangerously low level.” Note that savings are here being defined “net” of depreciation. But that “net” figure is then divided by gross national product, to make savings and investment look smaller than they are.

About the Author

Alan Reynolds

Alan Reynolds, National Review’s economics editor from 1972 to 1976, is a senior fellow at the Cato Institute and the author of Income and Wealth.

Featured Tags

At a June 21 meeting of the American League of Lobbyists, Charls E. Walker, chairman of the American Council for Capital Formation, predicted that the next President will impose a value-added tax, because he will want to “get a recession out of the way early.” Mr. Walker is as enthusiastic about value added taxes as he is about the resulting recession. In fact, he recently wrote to all members of the National Economic Commission, seeking support for a $90-billion VAT.

This uneasy case for a VAT begins with a familiar lecture in Calvinism: “At less than 2 per cent of gross national product,” writes Mr. Walker, “the U.S. rate of net domestic saving has fallen to a dangerously low level.” Note that savings are here being defined “net” of depreciation. But that “net” figure is then divided by gross national product, to make savings and investment look smaller than they are.