I would say that an income tax is NOT needed. An entire economy could run on VAT and similar consumption taxes. But a shift to a full VAT system is probably a longer-term proposition, and as the Keynesians would remind us, "In the long-term, we're all dead!" So maybe focusing on what's 'doable for now' is best. Fortunately, if I'm not mistaken, moving toward a partial VAT system seems to cross party boundaries, so maybe it's not impossible to realize sometime soon. As has already been mentioned, it already works in many other countries (I'm in Europe), so it's not a big risk. One advantage of having VAT, even if hybridized with income tax, is that it's far more impervious to political manipulation. Also, it'd be a good step in minimizing the economically damaging effects of all those deductions that currently exist. The home interest deduction is a perfect example; it looks great on the surface--most home owners probably couldn't imagine living without it--but does it really make sense to induce people to use their homes as investment vehicles? The bigger the better?? And by virtue of a regressive deduction??? I would much rather prefer a very high generalized exemption. That way I can choose whether to rent or own, without taking a penalty for making the 'wrong choice.' But from a political standpoint, how do you get rid of such an 'ingrained institution' as the mortgage deduction? This is where VAT/sales tax can serve as a helpful tool to phase it out. Insofar as the exemption goes, I've seen many good arguments ranging from 0 to 'very high.' I personally like the idea of indexing the amount someone can earn (or spend, as pertains to VAT) tax-free to the poverty line or some similar measure. In a system that's purely comprised of VAT/sales tax (no income tax), everyone would claim a rebate, allowing them to spend tax-free up to that level. Generally, I support Milton Friedman's idea of Basic Income via a Negative Income Tax. http://economistsview.typepad.com/economistsview/2006/11/milton_friedman_1.html It would mean that any income deficit below the poverty line can be filled (either fully or partially) by a direct payment similar to Bush's recent stimulus payment--only much bigger. That's one thing W actually got right. Generally, insofar as income tax goes, I prefer a flat tax over a stepped progressive. With the exemption and BI, the income curve would be inherently smooth-progressive despite the tax rate being nominally flat. Of course, that's based on the assumption that BI covers the entire below-poverty-line deficit. If not, then there's a step. In any case, it's very refined, IMO. But since your concern is universal healthcare, I'd look at it as a voucher that 'fits into' the BI/NIT framework. In my opinion, it would invoke the most support from both sides of the isle. Whether or not you can get the VAT might not be a deciding factor for universal health. But making noise about it could bring attention to the need for simplifying the current income tax--that might indeed be a deciding factor to getting universal healthcare. Cheers!