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SBE Council Comments on Volcker’s VAT Idea

Washington (PRESS RELEASE – April 9, 2010) — The Small Business & Entrepreneurship Council (SBE Council) expressed concern and alarm regarding serious consideration that is being given to the imposition of a value-added tax (VAT) on U.S. businesses. According to the advocacy group representing entrepreneurs, tax system changes need to provide greater relief, simplicity, and clarity. A VAT, however, works against those key principles.

SBE Council chief economist Raymond J. Keating said, “The VAT tax would be bad for everyone, especially small businesses. A VAT is a very dangerous levy. Imposed at each level of production, it hits businesses hard. And given that it is hidden from consumers, it turns out to be a relatively easy tax to increase. The VAT, especially on top of an income tax, builds up government while crushing the entrepreneurial sector of our economy.”

According to various reports, Paul Volcker, who heads up President Barack Obama’s tax reform commission, is talking up the idea of raising taxes, including the possibility of imposing a VAT. SBE Council says that such a tax would damage U.S. competitiveness, investment and job growth.

“The VAT idea is grossly misguided,” Keating adds. “Paul Volcker deserves enormous credit for reining in the inflation of the 1970s and early 1980s as Fed chairman, but when it comes to tax policy in the twenty-first century, his strategies will sink the economy.”

SBE Council President & CEO Karen Kerrigan observed, “There is little positive to say about a VAT – especially if it were to be levied on top of our currently burdensome and complex tax system. Compliance burdens and cost would be high for business, especially small businesses, and in an age where transparency is becoming increasingly important, a VAT works against such clarity.”

For more information on tax reform, including the VAT, SBE Council’s guide – “Renewing the Great Tax Debate: Tax Increases, Tax Relief, and Tax Reform” by Raymond J. Keating – can be accessed on the group’s website at www.sbecouncil.org.

SBE Council is a nonpartisan, nonprofit small business advocacy and research group that works to protect small business and promote entrepreneurship. For more information, please visit: http://www.sbecouncil.org/.

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