Wednesday, April 06, 2005

Responsible conservatism

In today's New York Times, Bruce Bartlett calls for a value-added tax (VAT) to help narrow the fiscal gap. Bartlett is a genuine small-government conservative, as opposed to those who simply borrow the clothes, and he recognizes that the "starve the beast" strategy of cutting taxes to shrink the government didn't work, because the governing Republicans proved to have no genuine interest in following it (or the structure of political incentives ensured that they would not). He rightly points out that it is a matter of when and how we raise taxes, not if. And a VAT - which he notes has been less of an ever-expanding money machine in other countries than legend would have it - is indeed the best reasonably available choice from an economic efficiency standpoint.
I myself, for distributional reasons, would prefer a progressive consumption tax, such as David Bradford's X-tax, in lieu of both the proposed VAT and the existing income tax. Others, such as Kevin Drum, would prefer income tax rate increases and base-broadening, along with a gasoline tax (which I would endorse) and an inheritance tax (a tougher issue).
These are all reasonable positions. If we lived in a better political world, these would be the options getting debated. Dream on ...


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