Wednesday, April 21, 2021
Ajay Mehrotra (Northwestern; Google Scholar) presents Nixon's VAT: The Rise and Fall of the 1970's National Value-Added Tax to Fund Education virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:
Nearly all developed countries and many in the developing world have some type of a national consumption tax, frequently in the form of a value-added tax (VAT). The United States is a glaring exception. Although the United States has numerous subnational consumption taxes, generally in the form of state and local sales taxes, our country has regularly rejected national consumption taxes. This paper — which is part of a larger comparative-historical project exploring the question: “why no VAT in the U.S.?” — examines the rise and fall of a 1970s national VAT proposal aimed at funding education. During 1969 and the early 1970s, the Richard M. Nixon presidential administration considered several VAT proposals and eventually recommended the adoption of a national VAT to fund education. While the education VAT had significant support among tax experts, policymakers, and social activists, it was eventually defeated in Congress.
This paper explores the rise and fall of Nixon’s VAT to fund education. It seeks to identify and analyze the general economic, social, political, and legal conditions that gave rise to several VAT proposals in the late 1960s and early 1970s, including Nixon’s failed VAT for education. This paper also seeks to explore the broader forces, seminal events, and pivotal historical figures that resisted the VAT during this period and why they were successful in rejecting this new national revenue source
The goal of this paper, and the larger project of which it is a part, is to understand better the twentieth-century American resistance to national consumption taxes, and perhaps why the United States remains the only advanced, industrialized democracy without such a levy.