He also said a European-style value-added tax could gain support.
The former chairman of the Federal Reserve who is an outside adviser to President Barack ObamaBarack ObamaBrown-Mandel Ohio Senate race will be brutal referendum on Trumpism The Hill's 12:30 Report Lewandowski: Trump's already done more to help US than Obama MORE, said the value-added tax "was not as toxic an idea" as it has been in the past, according to a Reuters report.
Volcker made the remarks at a New York Historical Society event Tuesday night. Volcker also suggested that a carbon or energy-related tax may become necessary to bring the budget back into check.
Volcker acknowledged that the ideas weren't popular but that the outlook on entitlement spending and budget deficits were grim without some changes.
"If at the end of the day we need to raise taxes, we should raise taxes," he said.
As Republicans pounced on Volcker's remarks, a White House official emphasized that the administration has approved tax cuts on middle-class families since taking office, and that he is pursuing additional tax cuts.
"The president has passed historic tax cuts for middle-class families and continues to push for more tax cuts," a White House official told The Hill. "The president is not proposing to cut the deficit at the expense of middle-class families."
Republicans went on the attack against the possible tax quickly on Wednesday, with the National Republican Congressional Committee releasing several quotes of Obama administration officials pledging not to raise taxes on the middle class.
Speaker Nancy Pelosi (D-Calif.) has previously suggested that something like the value-added tax, along with other possible revenue-raising measures, should be considered "on the table."
A value-added tax would be an additional tax added by retailers on goods and services and would be paid equally by all income levels.
The biggest question is on which products. In Britain, certain types of food, clothing and other products are exempt from the tax. If Congress goes ahead with a VAT it would have to determine what to include or exempt, potentially mucking up the waters for retailers.
This story was posted at 11:24 a.m. and updated at 12:35 p.m. and 1:08 p.m.