This post by Pete Davis on Value Added Taxes and how we might implement one in the United States is worth your time. Davis focuses on the downsides, but I did find one significant upside in his list.

Housing would be hurt be a VAT even if it is zero rated. Studies have shown that approximately half of the economic gains from a VAT result from shifting capital from housing to business.

That sounds like a terrific outcome to me, but, as a renter, I’m biased.

His broader point, though, is alarming:

Like, the U.K. when it adopted its VAT in 1973, the U.S. will struggle for at least two years and probably longer to implement a VAT. Hundreds of thousands of small businesses would have to register with the IRS and have their sales and remittances monitored. The IRS would have to hire tens of thousands more agents. Exemptions will alleviate some of that problem, but a VAT exemption still hits those businesses with the tax. The income tax looks bad now, but wait until you see this.

Liberals are attacking the idea that the IRS will have to hire thousands of new agents to manage the complexity of ACA. I find this pretty amusing. Yes, it could be that the IRS will not hire thousands of new agents. This either means that as households experience income shocks over a two-year period, there will be an extremely inadequate and ineffective appeals process to aid people who lost a job or a pay cut during that time that will lead to a large number of fraudulent claims going unchallenged. Or it will mean that the IRS will manage this appeals process through the use of black magic.

A VAT will certainly require a more intrusive inspection regime. That’s not necessarily a decisive case against the VAT. I still think we might need one. But it is certainly worthy of note, and I must say that I’ve grown more skeptical of its virtues, not least because I suspect we’ll get a VAT in addition to the existing income tax code rather than a VAT that finances a large income tax exemption.