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VAT is kind of a bad tax scheme. It's regressive and discourages consumption (which, like it or not, is the engine that drives our economy). It's better just

• jnordwick 7y ago
  > which, like it or not, is the engine that drives our economy no it doesnt. the US consumes a lot, but you are mistaking an accounting identity with something causal. if people decided to consume less, that means they are putting off current consumption for future consumption and saving those resources for investment to allow that to happen. don't worry - they'll consume at some point when they feel it is in their best interest (and if they don't, they basically just gave us a bunch of free labor). all economies everywhere are driven by production. human desire is pretty much endless - you rarely have to incentive consumption. when people have the resource (ie, they produced), they will naturally consume. the only way that long term standards of living improve is by increasing productivity (this is something virtually every economist agrees to). that is done by increasing capital stocks, machinery, technology. those are all production oriented activity.
• bumby 7y ago
  Isn’t the point of the categorical exemptions to avoid it being regressive? I.e., it skews the tax toward those consuming non-essentials? I agree that it may discourage consumption. It’s not clear to me that this is fundamentally a bad thing, at least in terms of conspicuous consumerism