The Value-Added Tax, a sales tax that applies at every level of business transactions, is an easy tax for governments to collect, and a hard tax to evade. So it makes the job of raising revenue easier. The revenues from the VAT can then be used to lower taxes on income and saving and investment. The Value-Added tax doesn't penalize work or saving; it's a tax on buying stuff.

Starting in the '80s or so, after the United States sharply cut its rates, other countries decided they better do it too, and here's how you do it: you just wipe out the exemptions, the deductions, the credits, the depreciation allowances. And people complain, "Oh my God, it's terrible," but you give them much lower rates and you give them an easier form to file, and people accept that tradeoff.

It was an easy thing to tax for a young country. And then gradually we moved to property taxes, manufacturing taxes, and the income tax was the answer to a populist demand: Let's go after the rich guys. We got into World War I, and they raised the rates and started taxing the rich. Then we got into World War II, and that's when they taxed everybody, because they just needed more revenue.

It turns out a VAT - a value-added tax - is a very easy tax to collect and a very hard tax to evade. It's a really good idea. It was invented about 60 years ago in France, of course. Because they're so good at taxing. They had a business tax that was easy to evade, and the head of the French IRS invented this value-added tax, which is very hard to evade.

It used to be that we taxed property - zapped farmers basically. And there were very rich people who didn't pay that much tax. So in 1913, they put in the income tax. It was incredibly popular. The tax we love to hate today.

If your employer pays your health insurance, that's not counted as income to you. And any economist would say that's your income, because they'd pay a higher wage if they didn't take it. That's a huge loss to the Treasury.

You also get a deduction in America for taking a night school course, growing sugarcane, moving to a new city for a job, replanting a forest, insulating the attic, destroying old farm equipment, employing Native Americans, commuting to work by bicycle - but only if the bike is regularly used for a substantial portion of travel - or buying a plug-in hybrid sports car, or buying a recreational vehicle. I mean there are hundreds of them, and most of them are nuts.