A new study warns that a value-added tax would kill 850,000 jobs in a year and cut retail spending by $2.5 trillion over 10 years. Sounds too bad for Washington to pass up.
An analysis for the National Retail Federation by Ernst & Young finds that adding a VAT to the U.S. tax system would reduce GDP for years, causing the loss of "850,000 jobs in the first year," plus "700,000 fewer jobs 10 years later."
A VAT imposed in such a way would also cause retail spending to drop by almost $260 billion — or 5% — in the first year alone, according to the study. As a result, "most Americans over 21 years of age when the VAT is enacted would be worse off," and there would be "significant redistributional effects across generations, reducing real incomes and employment for current workers."
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