Andrew Yang Responds to Criticism of Charging a Value Added Tax in U.S.

WASHINGTON – Entrepreneur Andrew Yang, a 2020 Democratic presidential candidate, responded to criticism of a Value Added Tax (VAT) that's charged in every European country and explained why he supports the tax as a way to fund his universal basic income plan of $1,000 per month.

According to the Tax Foundation, the VAT is a "consumption tax assessed on the value added to goods and services" and "the final VAT levied on a good or service is the sum of the VAT paid at each production stage." The Tax Foundation notes that "VAT-registered businesses can deduct all the tax already paid in the preceding production stages" but "the end consumer does not receive a credit for the VAT paid, making it a tax on final consumption." The European Union requires nations to charge a VAT of at least 15 percent.

Critics of the VAT argue that it would raise the price of products such as electronics for consumers. For example, the cost of iPhones is significantly higher in European countries compared to most U.S. states.

Yang was asked for his response to criticism of the VAT.

"It's already working in over 100 developed countries around the world so this is something that's been proven. There are ways you can tailor a value-added tax. You can exempt certain consumer staples," Yang said after a recent appearance at the National Press Club. "You could have it fall more heavily on luxury goods but everyone knows that my plan is to give every American $1,000 per month, which would increase the buying power of 94 percent of Americans even if you were to assume the VAT were to be fully passed along."