A VAT would also be fair and equal. It would be a proportional tax which would have similar effects on all income classes. Fairness would be achieved since those with similar incomes would pay similar amounts of taxes. This would be a vast improvement over the present system in which people with the exact same incomes often end up paying dramatically different amounts of taxes as a result of loopholes and differences in the composition of consumption.

Although most economists agreed that a VAT can successfully achieve horizontal equity, a traditional criticism focuses on vertical equity since the VAT is allegedly regressive. There are two problems with this criticism.

First, opponents' claim of regressiveness is questionable, since studies have shown that the VAT is not as regressive as payroll taxes which are currently in the US to generate as much as a fifth of total revenue. Furthermore, if the VAT is regressive, the government can easily offset this by granting refundable tax credits (such as the Earned Income Tax Credit).

For example, families below the poverty line could receive a credit of about $3000, which would be about the amount they paid in taxes. As income rose above the poverty line, the size of the tax credit could be reduced as appropriate.

Under this system, the long 1040 form would be reduced to a postcard, a postcard people would enjoy filling out since they would not be paying taxes, but receiving a check from the government in return.

In short, by implementing a VAT and granting income-adjusted refundable tax credits, the government can have the best of both worlds: efficiency and equity.

A VAT would also help the United States reduce its trade deficit. Because U.S. firms would no longer pay corporate taxes, they would be more competitive in international markets.

At the same time, a VAT would be easier to enforce. The compliance rate in the United states is less than 90 percent for income taxes and around 65 percent for capital gains tax, whereas the compliance rate for VATs in Europe and elsewhere is in the high 90s. This is largely a function of the simplistic format of the VAT.

The way to reform tax policy is not to simply build level upon revel of complex hierarchy into the code. Instead, the format must be simplified. Americans have a right to an efficient tax system that does not waste their time and hard-earned dollars.