Report: White House considering carbon tax, VAT as support for border-adjustment tax fades

If we’re going to fund billion-dollar left-wing boondoggles like high-speed rail, we might as well raise the revenue through left-wing means.

C’mon, what’s the real motive in leaking this? There’s no way a carbon tax or a VAT passes a Congress controlled by Republicans unless it’s offered in tandem with a massive rollback of the federal income or payroll taxes. Is this just the White House flashing a little leg at Democrats to get them interested in the tax-reform process? And if it is, why do they assume Dems would go along with two regressive taxes like these while Republicans are busy pushing lower taxes for the rich?

The value-added tax, which is popular in many other countries, would serve as a kind of national sales tax, one that consumers would pay when they make purchases and that businesses would pay for supplies, services and raw materials. A carbon tax would target the emissions of carbon dioxide and other greenhouses gases in the burning of gasoline, coal and other fossil fuels…

The search for new options reflects a recognition of the political challenges facing a proposal known as a border-adjustment tax that the White House and some Republicans had begun to rally around. The proposal, effectively a tax on imports, would not only raise needed revenue but also serve to fulfill Trump’s pledge to protect American companies from unfair export competition.

The tax would create incentives for companies to manufacture and produce goods domestically. But the proposal is unpopular with many other Republicans, who have said it would raise costs for consumers on things such as automobiles, electronics and clothing.

Two weeks ago, the White House said it wasn’t considering a carbon tax. But that was before lobbyists for giant retailers descended on the House to try to kill the border-adjustment tax, which Trump could have spun as a job-saving measure. Now they’re moving to plan B. The idea that the White House would turn to a VAT or a carbon tax, though, feels like an even more farcical replay of the health-care fiasco, in which Trump inexplicably backed a bill that would have disproportionately hurt older, rural, downscale voters — in other words, his own base. If ever there was a Republican who should be pushing tax hikes on the rich, it’s a populist like him; and in fact, he was okay with the idea at times during the campaign. Now, if you believe WaPo, he’s considering taxes that would hit the lower and middle classes hardest, including and especially in coal country where he’s popular. It’s bananas.

Three possibilities, then. One: The WaPo report is nonsense, a scare tactic designed to spook House Republicans into reconsidering the border-adjustment tax before Trump does something crazy and makes a deal with Pelosi. Two: He’s serious about the VAT and the carbon tax but he’s also planning massive tax breaks for lower-income voters to reduce the financial pain. Would his congressional caucuses go for that? Three: The liberals in his administration have wrested control from the populists and are now steering the economic ship, less than 90 days into Trump’s presidency. There have been rumors about that swirling over the last few weeks — but again, not even Democrats are likely to play ball on a VAT or a carbon tax unless there’s equal pain, at a minimum, for the rich under Trump’s reform plan. Is there? Is his coterie of Goldman alums ready for that? Are congressional Republicans? I think Kevin Drum’s right that the WaPo report is little more than vapor. I just don’t know whose vapor it is, or why.

The simplest explanation: Jared Kushner, who seems to be running everything else in the government these days, likes the idea of a VAT and/or carbon tax. Good enough for Trump!