Bill Gates and European countries have shown favor for consumption/VAT taxes. The arguments given by proponents are often something along the lines that "we know how to tax certain items more than others in a way that has the least negative impact on the economy but still maintains the necessary amount of revenue". But this seems to me more of something an accountant would say rather than an economist. For example, the U.S. might have placed a higher consumption tax on metal washboards in the 20's than shampoos. (A sudden drop in washboard manufacturing causes structural unemployment). Then the electronic washer comes in making the revenue collected from washboards decrease rapidly. In other words, the value of an item often changes over time. How does the government respond to the loss in revenue in a timely manner? I couldn't find research on this so I feel like I am missing some assumptions.


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