Ajay Mehrotra (Northwestern University and American Bar Foundation) presents a portion of his ongoing book project—tentatively titled American Outlier: Economic Inequality and the Historical U.S. Resistance to the Value-Added Tax—at Columbia’s legal history workshop today. Alex Raskolnikov (Columbia Law) will serve as discussant. Here is a taste of the summary of the project:

Nearly all developed countries and many in the developing world have some type of a broad-based national consumption tax, frequently in the form of a value-added tax (VAT). These levies operate like retail sales taxes but are remitted by businesses along the supply chain based on the “value” they add to goods and services. In many advanced industrialized nations, these taxes generate tremendous revenues that underwrite expansive public social-welfare spending, like universal healthcare, education support, and old-age pensions. Such direct social expenditures, in turn, promote redistribution and mitigate economic inequality.

The United States is a glaring exception. There are, to be sure, U.S. state and local sales taxes and sundry national excise taxes such as on gasoline, alcohol and tobacco. But the U.S. federal government has historically rejected broad-based national consumption taxes such as the VAT and its conceptual antecedents. Likewise, the United States has comparatively low levels of public social spending. From a global perspective, the United States is a low-tax country and a relatively low direct social-spending state. Thus, despite its tremendous economic prosperity, the United States continues to have some of the highest concentrations of wealth and the highest rates of poverty among peer industrialized nations.

This book project, tentatively titled American Outlier, explores why the United States has historically resisted broad-based national consumption taxes and what such resistance can tell us about the sources and nature of American inequality.