“The bottom line is that America has never and will never be able to tax its way to prosperity,” the letter states. “Our prosperity has always come from entrepreneurs, small business owners, and hard working Americans working freely to pursue their dreams. Adding a VAT to an overly burdensome tax code will destroy American jobs and crush American innovation.”
The letter also noted that several European nations enacted a VAT, which has failed to stem the rising tide of deficits and debt that have become troubling for many of those countries. Greece is the first country to teeter on the edge of default despite having a VAT.
“Between 2001 and 2008, Greece’s reported budget deficits averaged 5 percent per year. In 2009, the budget deficit was 13.6 percent of GDP [gross domestic product],” the letter states. “These deficits grew in spite of Greece’s 19 percent VAT rate.”
The U.S. is already on tap to pay roughly $7 billion of the $39 billion the International Monetary Fund (IMF) has pledged to help bail out Greece. The country will receive a total of $145 billion in loan guarantees from the IMF and the 15 nations that compose the European Union (EU).
“Not even a 19 percent VAT was able to save Greece from a full blown crisis,” the letter states. “We should not expect different results in America.”