Volcker: U.S. Taxes To Rise; VAT is Good Thing

Volcker receiving a honorary degree at Queens U, Canada.

Paul Volcker is still widely respected, some would say, unlike his successors Greenspan, or Bernanke for their roles in the financial crisis.

Mr. Volcker has stated the obvious (Reuters), that the value-added tax "was not as toxic an idea" as it has been in the past and also said a carbon or other energy-related tax may become necessary. He also acknowledged that both were still unpopular ideas, and added that getting entitlement costs and the U.S. budget deficit under control may require such moves.

"If at the end of the day we need to raise taxes, we should raise taxes,".

The VAT has been in used in Europe and Canada for many years. In Canada, it is called GST (Goods and Services Tax, federal only), or HST, the "harmonized" version combining federal and provicial taxes. The GST was recuded a couple of years ago from 7%, to 6%, and now it's 5%. It is a major source of funding for the government, and it is recognized that it works very well.

Why the US does not have such a tax is puzzling to people outside of the U.S.