Value-Added Tax and Pre-bate
Engine: Engine 1
Framing
The United States is the only OECD country without a federal Value-Added Tax (VAT) — a consumption tax collected at every stage of production where value is added, with the cumulative tax ultimately borne by the final purchaser. The Accord introduces a 13.5% standard VAT and a 6% luxury supplement applied to the portion of purchases above category-specific indexed floors, coupled to a universal monthly Pre-bate, paid per person, that neutralizes the burden on basic consumption.
The canonical parameters
Standard VAT rate: 13.5%, reached in rate steps of 5 / 8 / 11 / 13.5% over Years 1–4
Luxury supplement: 6% of the amount above per-category CPI-indexed floors (vehicles $110K MSRP · watches $3K · jewelry $5K per item · art $10K per lot · boats $250K · aircraft $500K; HTS/HS code families, National Statistics Board schedule by rule), live from Year 1
Universal Pre-bate: approximately $128/adult/month + $46/child/month, paid per person with no household test; envelope ≈ $436B/yr, the HHS household-schedule total at the standard rate
Exemptions: none (no food exemption, no medical exemption, no carve-outs)
Delivery: monthly to FedCard automatically
The luxury supplement
The supplement applies only to the portion of a purchase above the category floor — income-bracket logic applied to price, with no cliff and no rate band. A $111,000 car pays $60 of supplement; a $200,000 car $5,400; a $3M hypercar $173,400 (computed from the rate, so a rate change cannot strand the examples). It is levied once, at the final retail sale to an unregistered buyer and at customs for direct consumer imports, inside the credit-invoice chain; nothing upstream is ever classified. Floors are indexed to CPI-U and set by the National Statistics Board on a published methodology.
Why no exemptions
Exemption-laden VAT systems (food, medicine, children's clothing) produce lower revenue, higher administrative complexity, and regressive outcomes when exempt categories are consumed by wealthy households (organic produce, boutique pharmacies, designer children's clothing). The universal Pre-bate is the superior offset mechanism — it delivers cash to every adult regardless of what they consume, removing the regressivity of the consumption base without surrendering revenue to category carve-outs.
Revenue impact
Gross and net VAT are engine-scored year by year in the master tables (/methodology/master-tables): a taxable base of about 42% of GDP at the stepped standard rate, plus the luxury excess base at the supplement rate. The Pre-bate envelope is approximately $436B/year — the HHS household-schedule total at the standard rate, apportioned per person — and is a scheduled commitment: it scales with the rate ladder toward the per-person amounts and is never cut when collections fall short; the General Fund absorbs the gap. The luxury supplement is modestly additive.