THE policy world is abuzz with talk about whether a value-added tax should be part of the solution to our long-term fiscal problems. Most recently, Paul A. Volcker, head of President Obama’s economic advisory board, said a VAT was “not as toxic an idea” as it used to be.

But is it actually a good idea? Regardless of whether your politics lean left or right, the VAT gives you some things to love and some to hate.

Let’s start with the basics. Economists define a business’s “value added” as the revenue it gets from the sale of goods and services, minus the amount it pays for goods and services. So, for example, if a farmer sells wheat to a miller for $1, the miller sells flour to a baker for $2, and the baker sells bread to a customer for $3, each of the three producers has a value-added of $1.

(For simplicity, I am assuming that the farmer does not buy anything to grow the wheat.)

Now let’s invoke a piece of advanced mathematics: $1 + $1 + $1 = $3. That is, the value of the final product — the $3 bread — is the sum of the value-added along the chain of production.