Businesses and institutions would then pay to Treasury the taxes they collected less sales taxes they paid on purchases of materials and equipment, rent and the like. This subtraction would avoid the double taxation of materials and equipment businesses purchase and create a value added tax so often proposed by advocates of tax reform.
A VAT would favor no activity over another, and by taxing goods and services at the point of sale, it would end the problem of U.S. firms parking profits abroad to avoid taxes.
Businesses and institutions would file a three line return, how much tax they collected, how much they paid and the difference. Individuals would file no tax return at all!
Temptations would abound to exclude or exempt all kinds of activities but that is the kind of thinking that gave us the current mess -- and inequities, slow growth and exceeding complex tax returns.If Congress wants to spend more, it could raise the rate. That would make transparent to all the cost of spending more on government activities. If conservatives on Capitol Hill want to cut programs, they could explain to voters how much those cuts would lower the rate. Elegant, egalitarian and efficient, such a value-added tax without exemptions would give Americans the tax reforms they want but privileged rich folks and big businesses spend a fortune forestalling. The economy would grow more and Americans will live better and in less fear. And Mr. Durbin, that is what America is supposed to be all about. Follow @PMorici1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.