Acknowledging it would be a highly unpopular move, White House economic adviser Paul Volcker said Tuesday the United States should consider imposing a "value-added tax" similar to those charged in Europe to help get the deficit under control.
A value-added tax is a national sales tax that, like state and city sales taxes, would be collected by retailers.
Volcker, a former Federal Reserve chairman, told a New York panel on the global financial crisis that such a tax is "not as toxic an idea as it has been in the past."
"If, at the end of the day, we need to raise taxes, we should raise taxes," he said.
He also said that Congress might also have to consider new taxes on carbon and energy.
A White House official asked for comment, said, "The president has passed historic tax cuts for middle-class families and continues to push for more tax cuts. The president is not proposing to cut the deficit at the expense of middle-class families."
The value-added tax suggestion was immediately met with outrage by Republicans.
"It shouldn't surprise anyone that the Obama White House would advocate a European-style tax to help finance their European-style government health-care plan," said Brian Walsh, a spokesman for the National Republican Senatorial Campaign Committee.