A VAT is currently used by 160 out of 193 countries, including every developed nation except the US, because it is a more efficient way of generating revenue with no loopholes. Big companies and rich people are excellent at moving things around to avoid taxes – Amazon, Google, and other companies funnel hundreds of billions in earnings overseas. A VAT makes it impossible for them to benefit from the American people and infrastructure without paying their fair share.
Taxing income is an increasingly ineffective and inefficient way to generate revenue over time. Take a company like Amazon—it can do tens of billions in business and pay no income tax in a given period while storing its income overseas. A Value-Added Tax is a much more efficient way to capture the true value of the American infrastructure and will be increasingly necessary over time as more and more work is done by software, robots and artificial intelligence. With a VAT of half the European level, we can pay for Universal Basic Income for all American adults of $1,000 per month.
Problems to be Solved
- Corporations move money around to avoid paying their fair share of taxes.
- The burden of paying for social services falls disproportionately on those who earn the least.
- The Freedom Dividend should be funded by those who benefit most from the structure and work of society.
- Accounts for changes in the economy
- Generate a revenue stream that can’t be avoided by corporations who are trying to circumvent our taxation system
- Generate revenue that will be consistent with increasing automation
As President, I will…
- Implement a Value-Added Tax at 10%, half the European level. Over time, the VAT will become more and more important to capture the value generated by automation in a way that income taxes would not.
- This VAT would vary based on the good to which it’s applied, with staples having a lower rate or being excluded, and luxury goods having a higher rate.
- Use the VAT revenue to pay for the Freedom Dividend of $1,000/month per adult, Universal Basic Income.