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Observation:

L.L. Bravenec & Kerry Cooper, The Flexibility of the Value-Added Tax, 55 TEXAS L. REV. 453 (1976).

Proponents of a value-added tax (VAT) for the United States have urged its neutrality or lack of effect on business decisions as a major advantage.  This article critically examines that proposition.  Drawing on the European experience with the VAT, the authors survey those possible components of a VAT that would significantly affect the operating, financing, and organizing decisions of business firms: variations in rate, exemption of certain business activities, the tax treatment of capital expenditures, and the allowance and timing of credits against the tax.  The authors conclude that a VAT, like the income tax, is highly flexible; an American VAT would have only that degree of neutrality with which the Congress endowed it.