EU countries have VAT rates of 20-25% and do just fine. It’s nothing like enough to replace income tax though.
VAT is not quite equivalent to sales tax as it is only paid by the final consumer. (Businesses offset any VAT paid against against the VAT they collect on sales.)
That’s why I said add - I figure you need at least a 30% tax to replace federal income taxes, maybe more. State and local sales taxes aren’t anything to sneeze at either.
I think the mental impact of a 40%+ tax on transactions would have a chilling effect on them.
You overestimate what a vat or a sales tax would have to be to replace income tax.
Still sale taxes are generally regressive, even if they behave like VAT. The true step on federal taxes would be to simplify the system. Just a flat rate with no exemptions. The simple the system the less is spent trying to jimmy it, lobby it, etc.
This is unfortunately known for decades, and predicted accurately by Milton Friedman as a political problem, where both sides want different things, and both side actually get what they want politically.
VAT is not quite equivalent to sales tax as it is only paid by the final consumer. (Businesses offset any VAT paid against against the VAT they collect on sales.)