When it comes to getting control of the country's debt burden, "I think if we can't do it on the cost side, we've got to go on the revenue side. And it's too early to do it, but it's not too early to begin wondering," Volcker said Wednesday in an televised interview with PBS' Charlie Rose. "You've got talk about some tax that hits consumption," said Volcker. "Value-added is one."
I'm disappointed to see Volcker advocating this. I was thinking he was one of only a few grown ups in D.C. nowadays.
"You've got talk about some tax that hits consumption," said Volcker. "Value-added is one."Yes, VAT is a consumption tax.
He is being grown-up, and he's being a realist. If Congress refuses to curb it's deficit-spending ways, then there is no choice but to increase taxation and try to get more revenues. Current deficit spending levels are unsustainable, so it's either cut back on spending or increase taxation.
Volker said "if we can't do it on the cost side" - if we cannot curb spending - "we've got to go on the revenue side" - increase taxation.
It's quite grown-up, it faces and addresses the problem straight on. If Congress does not curb deficit spending there is no other option but to increase taxation. And since our economy is essentially a consumption-based economy, you have to look at taxation of consumption. Sales tax or VAT, you pick.