How a Value Added Tax could spark economic growth

May 12, 2017

Sections Public Policy Video

The US and other developed economies are stuck in a low-growth pattern, and low interest rates limit what central banks can do to help. While raising taxes is politically risky, research suggests that a Value Added Tax could be used to spark growth. Chicago Booth’s Michael Weber explains how a VAT hike that Germany announced in 2005 led to a consumption boom—and why the US might want to follow Germany’s lead.