That leaves a big question: Would a VAT like Mr. Cruz wants ultimately be paid by consumers, or by workers and business owners, or by some combination?

The answer is important, but not quite as important as it would first seem, because all options ultimately describe the same set of people. We are all consumers — even the owners of businesses — who have bothered to accumulate wealth because it will make it possible to consume things later. A VAT could be passed entirely onto consumers in the form of higher prices. This would cause consumers’ real incomes to decline by 16 percent. Or, prices could stay the same, and businesses could adjust to the new tax by cutting employees’ wages and taking home less in after-tax profits, also causing their real incomes to decline by 16 percent.

While the two options would have similar effects across the whole economy, their effects on individuals would vary, mostly because people already have some wealth they earned before the tax was imposed. If the VAT were to cause a rise in prices, its effects would be that of any other bout of inflation: The value of wealth would decline for owners of debt, whether banks that hold mortgages or retirees with savings in Treasury bonds.

On the other hand, the decline in businesses’ after-tax profits as a result of the need to pay VAT would show up as a decline in stock prices. Anyone owning stocks would be hurt. It wouldn’t be quite so bad for them if we also had a bout of inflation, because that would reduce the real amount of corporate debts (companies would have to pay the same number of dollars to settle their existing bonds, but a dollar wouldn’t be worth as much anymore) and that savings would accrue to shareholders.

So that still leaves two questions: Who, exactly, would pay? Would the Fed inflate in response to this new tax or not? Alan Viard, an economist at the conservative American Enterprise Institute, wrote an article on these questions for Tax Notes last year, arguing that the central bank will tend to react to a new tax by allowing inflation only to the extent that is necessary to avoid disruption in the labor market — and that extent depends upon the structure of the tax.