Hall, Robert E., and Alvin Rabushka, “The Flat Tax,” Hoover Institutional Press, 1985

“The efficiency and simplicity of the VAT can be preserved at the same time that the tax system is made progressive and the inflationary consequence of tax reform are eliminated.  The modification of the VAT needed for this purpose is a transfer to individuals of the responsibility for paying the tax on the wage and salary component of value added.  Once individuals instead of businesses are paying the tax, a generous allowance can be provided so as to make it progressive.  Further, if the tax is paid by individuals, it will not be necessary for prices to rise.  No burst of inflation will accompany a switch to the modified progressive VAT.  This modification of the VAT is precisely the Hall-Rabushka proposal,” p. 111  

(VATinfo Note: It is unlikely that the WTO-GATT rules would recognize this tax as border-adjustable, i.e., subtracted from exports and added to imports. Further, since the wage and salary components are not included, the border-adjustable amount of the tax would be less than with a conventional VAT and H-R would reduce some of the leveling benefit.)