I think Kash's argument for imposing a Value Added Tax are pretty compelling. Folks tend to get caught up in the regressiveness of this, but I'd caution that the programs to be shored up by any tax increase -- namely Social Security and Medicare -- are inherently progressive, and keeping them in good shape is crucial. Moreover, I'd be fully supportive of coupling a VAT with some broad-based, progressive tax reform, maybe Ron Wyden's Fair, Flat, Tax proposal. Package the two together and you offset much of the VAT's regressiveness, achieve serious tax simplification, and bring government spending into line with revenue, which saves primarily progressive programs.
Another way to use the VAT is as a dedicated funding source for universal health care, as in the Center for American Progress's proposal. I find that scenario particularly attractive, but then, you knew I would. I think Democrats spend too little time thinking about the power of dedicated funding sources, which strike me as a politically potent way to levy new taxes that have a direct and recognizable connection to new services. That's an easier sell than a generalized hike in rates, and with health care reemerging as the nation's top issue, I think folks would be uniquely receptive to a reasonable consumption tax that assures them medical coverage.
