China has a VAT. My understanding is, they reimburse the VAT on any products exported. In effect, it’s a tax-break to their domestic manufacturers who compete in international markets.
Would not support a VAT as a way to finance some socialist boondoggle. I am keeping an open mind as to any way to lower trade deficits or give our domestic manufacturers an edge overseas. A VAT is just a tool. How it’s applied is the rub.
With the ‘Rats in power, you can guarantee that a VAT would be used for a socialist program to buy votes, mostly from those who would be laid off as the few remaining factories closed.
“China has a VAT. My understanding is, they reimburse the VAT on any products exported. In effect, its a tax-break to their domestic manufacturers who compete in international markets.”
That is how most VATs work. You are correct that a border adjustment element in a country’s tax system gives it a leg up in international trade. There are 30 countries in the OECD. We are the only one of the 30 without a border adjustment element in our tax system and the only one which has a massive trade deficit. In fact, the other 29 actually have a net trade surplus - even though neither China nor India are in the OECD.
The FairTax would be the most desirable option in this respect because it is the only proposal that takes 95% of federal taxes and includes them in a border adjusted tax. That would maximize the tax system’s competitive position.