Taxing State Governments under a Federal Value Added Tax: Part 2

4 Pages Posted: 14 Feb 2013

See all articles by Alan D. Viard

Alan D. Viard

American Enterprise Institute

Date Written: August 13, 2012

Abstract

In the first article of this series, I considered the proper treatment of state governments under a hypothetical federal value added tax. In this article, I extend that analysis. As in the first article, I assume that a federal VAT should maintain neutrality between goods provided by the private sector and those provided by state governments. Although the federal government may well wish to subsidize state governments' provision of particular goods, such subsidies are better provided through specific grant programs than through the VAT system. Also, the VAT should surely not favor in-house production of goods by state governments' own employees and capital stock over state governments' production of goods using inputs purchased from private firms.

Suggested Citation

Viard, Alan D., Taxing State Governments under a Federal Value Added Tax: Part 2 (August 13, 2012). State Tax Notes, Vol. 65, No. 7, 2012, Available at SSRN: https://ssrn.com/abstract=2217930

Alan D. Viard (Contact Author)

American Enterprise Institute ( email )

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