Another person who raised the issue of a VAT this week was John Podesta, who heads the liberal think tank Center for American Progress. He believes taxes on the wealthiest and corporations will not solve the entire problem. The shortfall in Federal revenues is too high to make up the difference.

But the big question is: how high would that VAT be? Some who are discussing the option believe the government can make this more politically acceptable if tax rates are lowered at the same time.

In fact, that's exactly the strategy California Governor Arnold Schwarzenegger is pushing with something like a VAT called a Business Net Receipts Tax. His bipartisan tax commission wants California tax rates to be cut from 7 to 3 percent, and wants California to eliminate the corporate income tax and the 5 percent sales tax. These two taxes would be replaced by the Business Net Receipts Tax. The idea won favor with The Wall Street Journal, which supported the plan in an editorial.

The big problem with a VAT is that it tends to hit those with lower incomes the hardest, since they tend to use all of their income for consumption. If prices are higher on most items, their spending power will be much lower. Additionally, income taxes are lower for those in lower-income brackets, so a cut in income tax rates wouldn't make a big difference for them. However, they would end up paying a larger share of their income in taxes with a VAT system.

Would you support a value-added tax if it means lower income taxes?

Lita Epstein has written more than 25 books including The Complete Idiot's Guide to Tax Breaks and Deductions.