USA: Push for a VAT in addition to our Income Tax
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John Carson wrote:
Things picked up subsequently.
As they might have anyway. Any economic theories with math about the effects of VAT?
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin
Oakman wrote:
As they might have anyway.
Sure.
Oakman wrote:
Any economic theories with math about the effects of VAT?
Libararies full of the stuff.
John Carson
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John Carson wrote:
Things picked up subsequently.
As they might have anyway. Any economic theories with math about the effects of VAT?
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin
Jon, VAT - you may find some of these interesting to read ... Small Business Resource - What is VAT[^] VAT & Inflation[^] VAT Missing Trader Fraud[^] A Tax-Based Test for Nominal Rigidities[^] HM Revenue and Customs & Excise[^]
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Jon, VAT - you may find some of these interesting to read ... Small Business Resource - What is VAT[^] VAT & Inflation[^] VAT Missing Trader Fraud[^] A Tax-Based Test for Nominal Rigidities[^] HM Revenue and Customs & Excise[^]
Just sounds like another confusing way to tax or in other words BS.
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Just sounds like another confusing way to tax or in other words BS.
If tax was simple and easy to understand, accountants would be surplus to requirements. And even our Chancellor of the Exchequor wouldn't need tax accountants to sort his taxes out. (The Chancellor of the Exchequor is the position in Government who is responsible for setting tax legislation and thus collecting tax revenues in the UK)
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Jon, VAT - you may find some of these interesting to read ... Small Business Resource - What is VAT[^] VAT & Inflation[^] VAT Missing Trader Fraud[^] A Tax-Based Test for Nominal Rigidities[^] HM Revenue and Customs & Excise[^]
Interesting. It appears that many economists have decided that VAT is not inflationary - IF it replaces other taxes 1:1. So my question to them would be: how often does a government change its tax code with an eye to not bringing in any more money? The "Tax-Based Test..." points out something I've run across before: Keynes and neoKeynesians rely greatly on a very rigid wage structure when prices go up because of VAT or sales tax, energy costs, the devaluing of the dollar, etc. Yet, back in the 70's, Nixon imposed a wage/price freeze because he and his advisors realised that both marched upwards pretty much in lock step. (He'd just devalued the dollar by going off the gold standard.) Ultimately, I suspect that a VAT in the US will be a way of obama raising taxes by a fair amount without raising personal income taxes, and that it will combine with his devaluing of the dollar (which is already making the Chinese scream and showing up in the bond market as an increase in interest) to create an inflationary rate our economy cannot handle.
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin
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Interesting. It appears that many economists have decided that VAT is not inflationary - IF it replaces other taxes 1:1. So my question to them would be: how often does a government change its tax code with an eye to not bringing in any more money? The "Tax-Based Test..." points out something I've run across before: Keynes and neoKeynesians rely greatly on a very rigid wage structure when prices go up because of VAT or sales tax, energy costs, the devaluing of the dollar, etc. Yet, back in the 70's, Nixon imposed a wage/price freeze because he and his advisors realised that both marched upwards pretty much in lock step. (He'd just devalued the dollar by going off the gold standard.) Ultimately, I suspect that a VAT in the US will be a way of obama raising taxes by a fair amount without raising personal income taxes, and that it will combine with his devaluing of the dollar (which is already making the Chinese scream and showing up in the bond market as an increase in interest) to create an inflationary rate our economy cannot handle.
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin
As you know, Income Tax is a tax payable as the result of your earnings. Whereas VAT is a tax on what you spend. The two are not, as such, interchangeable, although some massaging probably occurs. If VAT is a direct replacement for sales tax and if the replacement doesn't take advantage of people's ignorances then it should be a fair application. However, this VAT as stated would not in itself be inflationary unless the tax as collected is not a direct 1:1 replacement but there are some problems that you in the USA would encounter - namely State taxes are in addition to any Federal inspired tax and VAT would most likely be a Federal inspired tax. As well as the "how it is applied". What I mean there is, is VAT to be applied before or after State taxes? More revenue would be generated if VAT is applied after State taxes. This is where it could become inflationary. Of course, the more sales that are made the more VAT is collected, so in times of a booming economy, the Government is laughing "all the way to the bank". Regarding VAT, in Britain, there are a number of shopping items that would be zero rated. Such as most foodstuffs and most children's clothing. However, here is a strangest thing, if, say, you are a retailer of fresh meats, you would buy in polystyrene/plastic trays and cling-film to package the meats into weights and volumes you sell to your customers. You are charged VAT by your supplier of such items yet because you sell this meat and this meat is zero rated, your internal accountancy practices must show an input VAT higher than your Output VAT thus you are entitled to a refund of that VAT you have paid. Add to that any items you sell that are VAT rated above 0% thus your Output Tax would be greater that your Input tax for such items. A payment of the difference is required. Therefore you can understand my comment in a message above where the business is acting as an unpaid tax collector. In Britain, because of the EU aspect of tax law, once VAT at the standard rate has been applied to an item, it can no longer be zero rated but can be reduced or raised.
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As you know, Income Tax is a tax payable as the result of your earnings. Whereas VAT is a tax on what you spend. The two are not, as such, interchangeable, although some massaging probably occurs. If VAT is a direct replacement for sales tax and if the replacement doesn't take advantage of people's ignorances then it should be a fair application. However, this VAT as stated would not in itself be inflationary unless the tax as collected is not a direct 1:1 replacement but there are some problems that you in the USA would encounter - namely State taxes are in addition to any Federal inspired tax and VAT would most likely be a Federal inspired tax. As well as the "how it is applied". What I mean there is, is VAT to be applied before or after State taxes? More revenue would be generated if VAT is applied after State taxes. This is where it could become inflationary. Of course, the more sales that are made the more VAT is collected, so in times of a booming economy, the Government is laughing "all the way to the bank". Regarding VAT, in Britain, there are a number of shopping items that would be zero rated. Such as most foodstuffs and most children's clothing. However, here is a strangest thing, if, say, you are a retailer of fresh meats, you would buy in polystyrene/plastic trays and cling-film to package the meats into weights and volumes you sell to your customers. You are charged VAT by your supplier of such items yet because you sell this meat and this meat is zero rated, your internal accountancy practices must show an input VAT higher than your Output VAT thus you are entitled to a refund of that VAT you have paid. Add to that any items you sell that are VAT rated above 0% thus your Output Tax would be greater that your Input tax for such items. A payment of the difference is required. Therefore you can understand my comment in a message above where the business is acting as an unpaid tax collector. In Britain, because of the EU aspect of tax law, once VAT at the standard rate has been applied to an item, it can no longer be zero rated but can be reduced or raised.
Richard A. Abbott wrote:
Whereas VAT is a tax on what you spend.
Actually it's a tax on every market transaction. Some items as they move from manufacturer to wholesaler to distributor to retailer will pay the tax at each level. By the time the customer buys it, he's paying a price that includes the two previous taxes and - since they have raised the price, he's paying a tax on those taxes. The States will be happy since the new higher prices will generate more sales tax for them.
Richard A. Abbott wrote:
so in times of a booming economy, the Government is laughing "all the way to the bank".
And, in times of busting economy, the well-off cut back on their spending while the poor have far less discretionary income.
Richard A. Abbott wrote:
Regarding VAT, in Britain, there are a number of shopping items that would be zero rated.
Once again loopholes raise their ugly heads and that tax is no longer flat nor fair.
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin
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Richard A. Abbott wrote:
Whereas VAT is a tax on what you spend.
Actually it's a tax on every market transaction. Some items as they move from manufacturer to wholesaler to distributor to retailer will pay the tax at each level. By the time the customer buys it, he's paying a price that includes the two previous taxes and - since they have raised the price, he's paying a tax on those taxes. The States will be happy since the new higher prices will generate more sales tax for them.
Richard A. Abbott wrote:
so in times of a booming economy, the Government is laughing "all the way to the bank".
And, in times of busting economy, the well-off cut back on their spending while the poor have far less discretionary income.
Richard A. Abbott wrote:
Regarding VAT, in Britain, there are a number of shopping items that would be zero rated.
Once again loopholes raise their ugly heads and that tax is no longer flat nor fair.
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin
Oakman wrote:
Actually it's a tax on every market transaction
Not exactly as applied in UK. It is a tax on those items that are NOT tax exempt. And those that are rated as zero are not tax exempt.
Oakman wrote:
Some items as they move from manufacturer to wholesaler to distributor to retailer ...
VAT don't work like that Jon. This is how it works ... Manufacturer buys in the raw goods, many are likely to attract VAT. Whatever the VAT as charged, it is an Input Tax. The manufacturer supplies the goods to his customer (wholesaler/distributor/whatever) and charges VAT on the sale price of the item. This VAT is the Output Tax. The difference between Output Tax and Input Tax is paid (or reclaimed) to the Government's Revenue collection people. The Wholesaler (or whosoever) adds their mark-up, but this mark-up is on the price of the goods that the manufacturer charges excluding any taxes. The VAT Tax paid becomes the Input Tax (remember, this Input Tax was EXACTLY the Output Tax from the manufacturer), the wholesaler then with his marked-up price then applies VAT to that marked-up price and is the Output Tax and the difference again between Output Tax and Input Tax is paid (reclaimed) from Government. And so on along the supply line until the final purchaser consumes the product. The final customer has not made any payments of Input Tax or Output Tax on any intermediary. He only pays the VAT as Output Tax to the final supplier who then sends (reclaims) difference between Input Tax and Output Tax to Government. The difference between manufacturing sales price and the price the final customer pays only reflects whatever the mark-ups are and no VAT related taxes in-between. Only VAT paid by the final customer is calculated on the final price of said item. The final customer is not paying tax upon tax upon tax, although some unscrupulous organizations might wish to charge extra to whosoever their customer is that little bit extra, thus my comment above where I made claim of "people's ignorances".
Oakman wrote:
loopholes
That which I commented about some zero rated items, those are food/children's cloths and some other items. It is written into law what is and what is not to be charged at zero % or those that are VAT exempt. So loopholes, in this respect, are not valid. But if loopholes you want, try this ... Chocolate chip biscuits ar
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Oakman wrote:
Actually it's a tax on every market transaction
Not exactly as applied in UK. It is a tax on those items that are NOT tax exempt. And those that are rated as zero are not tax exempt.
Oakman wrote:
Some items as they move from manufacturer to wholesaler to distributor to retailer ...
VAT don't work like that Jon. This is how it works ... Manufacturer buys in the raw goods, many are likely to attract VAT. Whatever the VAT as charged, it is an Input Tax. The manufacturer supplies the goods to his customer (wholesaler/distributor/whatever) and charges VAT on the sale price of the item. This VAT is the Output Tax. The difference between Output Tax and Input Tax is paid (or reclaimed) to the Government's Revenue collection people. The Wholesaler (or whosoever) adds their mark-up, but this mark-up is on the price of the goods that the manufacturer charges excluding any taxes. The VAT Tax paid becomes the Input Tax (remember, this Input Tax was EXACTLY the Output Tax from the manufacturer), the wholesaler then with his marked-up price then applies VAT to that marked-up price and is the Output Tax and the difference again between Output Tax and Input Tax is paid (reclaimed) from Government. And so on along the supply line until the final purchaser consumes the product. The final customer has not made any payments of Input Tax or Output Tax on any intermediary. He only pays the VAT as Output Tax to the final supplier who then sends (reclaims) difference between Input Tax and Output Tax to Government. The difference between manufacturing sales price and the price the final customer pays only reflects whatever the mark-ups are and no VAT related taxes in-between. Only VAT paid by the final customer is calculated on the final price of said item. The final customer is not paying tax upon tax upon tax, although some unscrupulous organizations might wish to charge extra to whosoever their customer is that little bit extra, thus my comment above where I made claim of "people's ignorances".
Oakman wrote:
loopholes
That which I commented about some zero rated items, those are food/children's cloths and some other items. It is written into law what is and what is not to be charged at zero % or those that are VAT exempt. So loopholes, in this respect, are not valid. But if loopholes you want, try this ... Chocolate chip biscuits ar
Does cane sugar, flour, and other staple goods fit under the 0% in the UK?
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Does cane sugar, flour, and other staple goods fit under the 0% in the UK?
Essentially yes, all foodstuffs are zero rated except those that are defined as confectionery. If you follow the links within the link to HM Revenue and Customs that I gave some postings above, it does go into great detail that which is exempt, zero rated and so on.
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Oakman wrote:
Actually it's a tax on every market transaction
Not exactly as applied in UK. It is a tax on those items that are NOT tax exempt. And those that are rated as zero are not tax exempt.
Oakman wrote:
Some items as they move from manufacturer to wholesaler to distributor to retailer ...
VAT don't work like that Jon. This is how it works ... Manufacturer buys in the raw goods, many are likely to attract VAT. Whatever the VAT as charged, it is an Input Tax. The manufacturer supplies the goods to his customer (wholesaler/distributor/whatever) and charges VAT on the sale price of the item. This VAT is the Output Tax. The difference between Output Tax and Input Tax is paid (or reclaimed) to the Government's Revenue collection people. The Wholesaler (or whosoever) adds their mark-up, but this mark-up is on the price of the goods that the manufacturer charges excluding any taxes. The VAT Tax paid becomes the Input Tax (remember, this Input Tax was EXACTLY the Output Tax from the manufacturer), the wholesaler then with his marked-up price then applies VAT to that marked-up price and is the Output Tax and the difference again between Output Tax and Input Tax is paid (reclaimed) from Government. And so on along the supply line until the final purchaser consumes the product. The final customer has not made any payments of Input Tax or Output Tax on any intermediary. He only pays the VAT as Output Tax to the final supplier who then sends (reclaims) difference between Input Tax and Output Tax to Government. The difference between manufacturing sales price and the price the final customer pays only reflects whatever the mark-ups are and no VAT related taxes in-between. Only VAT paid by the final customer is calculated on the final price of said item. The final customer is not paying tax upon tax upon tax, although some unscrupulous organizations might wish to charge extra to whosoever their customer is that little bit extra, thus my comment above where I made claim of "people's ignorances".
Oakman wrote:
loopholes
That which I commented about some zero rated items, those are food/children's cloths and some other items. It is written into law what is and what is not to be charged at zero % or those that are VAT exempt. So loopholes, in this respect, are not valid. But if loopholes you want, try this ... Chocolate chip biscuits ar
Richard A. Abbott wrote:
VAT don't work like that Jon.
Fascinating - The person who explained to me had lived in England for 4 years. Either she didn't ever bother to find out or she was trying to push my buttons.
Richard A. Abbott wrote:
So loopholes, in this respect, are not valid.
Most loopholes are written into the law, specifically to favor this group or that.
Richard A. Abbott wrote:
be cautious of how wording in law is written
AFAIK whenever both a state and the feds tax something (gasoline, income, etc) both apply their tax to the base item and neither taxes the other.
Jon Smith & Wesson: The original point and click interface Both democrats and republicans are playing for the same team and it's not us. - Chris Austin