VAT led to increased spending and less economic growth.
Engel 12 [Charles C. Engel is an American economist and the Hester professor in the economics department at the University of Wisconsin-Madison. He does research on nominal/real exchange rate movements. He is a research associate for the National Bureau of Economic Research for 34 years. He obtained a PhD in Economics from University of California, Berkeley and a B.A. in Economics and Political Science from University of North Carolina at Chapel Hill. August 1 2012. “REVISITING THE VALUE ADDED TAX: A CLEAR SOLUTION TO THE MURKY UNITED STATES CORPORATE TAX STRUCTURE,” Indiana International & Comparative Law Review. EBSCOHost. Available at: http://proxy.lib.umich.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=85346567&site=ehost-live&scope=site through University of Michigan Libraries //SChalla]
European Union Member States are able to generate substantial revenue with the VAT, but the VAT also has presented Members with many challenges.^'* First, the VAT has become a vehicle of greater public spending for Member States.^" When the VAT first appeared in Europe in the 1960s, average government spending was about 30.2 percent of GDP.^^" Today, European Union Member States spend on average 47.1 percent.^^' In that same time period, the United States government spending rose from 28.3 percent to 35.3 percent.^^^ Additionally, average deficits have been higher in the European Union than in the United States since 1980.^^^ The increased debt and government spending has resulted in less job creation and lower levels of income for Europe.^^'* Over the last two decades, the U.S. economy grew one third faster than that of the European Union Member States.^" Finally, European Union Member States have struggled with VAT fraud,^^* resulting in an estimated loss of €60-6100 billion ^"