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Abstract
A value-added tax (VAT) has been mentioned as an alternative to increasing Federal taxes. Since the Common Market has implemented such a tax, current literature draws heavily upon the EC experience. However, differences between U.S. and Common Market conditions have led to confusion over the nature of a value-added tax and its possible use in this country. Exactly how the VAT would affect various sectors of the U.S. economy would depend in part upon the method used to calculate the tax and the Government's method of imposing the tax. Adoption of a new tax such as a VAT might give the United States the opportunity to undertake desired reforms in its tax structure without either increasing the impact of present taxes on taxpayers or reducing total Federal tax revenues. Should a U.S. value-added tax be adopted, farmers should, to the greatest possible extent, be full participants in the tax plan for best results. For instance, exemption for farmers would penalize them since they would have no means of claiming credit for taxes paid on inputs. At the same time, recognition of special characteristics of agriculture is necessary, particularly where small farmers are concerned.