February 3, 2011

The Value Added Tax: Impacts on Florida

  • Randall G. Holcombe

    DeVoe Moore Professor of Economics, Florida State University
  • Christopher Boudreaux

Key materials
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As the United States faces a record federal budget deficit forecast, policy makers are considering imposing a federal Value Added Tax (VAT). Lawmakers, however, have overlooked the negative impact of the VAT on state governments. A VAT would lower overall economic growth, decreasing both federal and state tax revenue, and would compete for a tax base already tapped by existing state sales taxes. This would particularly harm states like Florida that rely disproportionately on state sales tax revenues.