Well, if they had a VAT but cut the income tax an equal amount, then that would cut labor costs. You wouldn’t have to pay workers as much if they were taxed less, and they’d still have the same takehome pay.
ANY tax is a drag on the economy. But if the Euros have the VAT and we don’t, it means that free trade is badly skewed against us.
Our production wouldn’t go to Europe. It would go to places without a VAT and with low wages. Southeast Asia and China.