VAT Would Put 850,000 People Out of Work: Industry Group

Introducing a value-added tax would cost the American economy 850,000 jobs in its first year, according to the National Retail Federation.

Policymakers are considering a VAT as a possible way to reduce the federal deficit, which is currently at its highest as a share of GDP since World War II.

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The new tax would be bad news for retailers across the country, as it would raise the cost of many consumer goods.

"Hundreds of thousands of people who have jobs today would find themselves out of work," said Matthew Shay, CEO of the National Retail Federation. "Clearly, a VAT would be part of the problem, not part of the solution."

Ernst & Young conducted the research, along with Tax Policy Advisers. They focused on a "narrow-based" VAT, and assumed that it would apply to most consumer goods and services, with exemptions for items such as health care and groceries.