The Value Added Tax: A Hidden New Tax to Finance Much Bigger Government

[BrewsterMcBrewster]

Man, I'm so sorry I haven't known about you until now! This is GREAT STUFF! Even 15 years later! These ideas truly stand the test of time!

[asleeperj]

@ajpmathwiz You sir are some what correct. Europe's problem is that they have too high a tax rate on consumers. They have no true investment and savings, too much spending on social programs, too much spending helping America with it's unjustified wars; they have, a central bank in each country that prints money, and a slew of other problems. I believe in a consumer side tax, if it is the only tax, is the best way to go, but not in addition to other taxes.

[alcraig]

Do you notice there is no mention of how much tax corporations pay. In the US there is a disproportionate tax burden placed on income tax payers. For example In 2009 and 2010, Exxon Mobile paid only $39 million on its $9.9 billion profit - an effective tax rate of only 0.4%. Although everyone hates taxes the benefit of a consumption tax is it captures everyone including the corporates. This guy is definitely not looking after YOUR wellbeing.

[IRONMANAustralia]

In Australia we call the VAT, the "GST", (Goods and Services Tax), adopted in 2000.

I recall trying to explain to people before the fact, that it was NOT a total reform of the existing system.

In a recent conversation I rolled my eyes as a friend of mine who had been in favour of it said, "I thought it was gonna replace income tax".

That never was the promise, but it was a common misconception on the street, (that the government make no effort to correct I might add).

[Greendogo]

VATs without income tax or any of the other tax collection schemes would be great. Adding them to the existing tax code is not the correct solution! Great video!

[hauskalainen]

Wealthy Americans HATE the idea of an American VAT. The advantage of VAT is that it is much harder for wealthy people to avoid paying it. Because the tax builds cumulatively every company selling on goods will wish to charge VAT because only then can they claim BACK they paid on intermediate goods and services that they themselves acquired. Billionaire Mitford Romey did not buy his BMW from his local dealer in the US, He imported it from a German dealer, The Germans do not add VAT because Romey is a US citizen and his German dealer has papers proving the car was exported. In fact they can claim BACK from the German taxpayer the accumulated VAT that THEY paid. But neither does he pay US sales tax because he did NOT buy his car from a dealer in America. This is a wonderful loophole and the wealthy exploit it to avoid paying tax. Wealthy people now how to clear stuff through customs. Your average Joe does not. No wonder wealthy Americans do not want the VAT. The average Joe SHOULD want the VAT because it is FAIR.

[lostbuffalo]

DOUBLE TAXATION HIDDEN WITHIN FRAUD OF COMPLEX DESCRIPTION.
FICA is a payroll tax. It is on the act of paying earned income opening the door for double taxation.
A VAT is a performance tax on labor + earned income
Sales tax on a service is VAT collected at the time of sale. the methods of tabulation and collection are different but the thing taxed is the same
The sales tax on services and the VAT are the same and tax the production of earned income.
Neither apply to capital gains they tax labor

[raystinsky]

@alcraig I really like that you used an "s" in "realise". I think it's a superior way to spell it.

The breaks are built in because we have an interventionist government. If we went free market (which, admittedly companies often don't really want) taxes would become far simpler. Yes, businesses themselves are a large part of the tax problem through their own avarice and willingness to manipulate government power. If you're saying that we certainly agree there.

[FireHicks]

I also agree. As tax burdens keep increasing, what is going to happen eventually in the future? Government is reactive in the here and now, but are they considering (or care about) what is going to happen in the future when they are no longer in office? What will happen to our economy when it gets so out of control that we finally reach a breaking point? It scares me because at this rate, I know that I will live to see the ramifications.

[danielmy]

This guy is 100% correct...VAT for governments is like a life of crime to a bum...the more they get habituated to it ...the more corrupted and money hungry they become.

[danielmy]

@fireicer what does it cost to register for VAT in the UK? How is it you don't pay VAT on tools etc...seems to me that VAT is levied on everything except essentials like food and stuff for kids.

[alcraig]

@raystinsky I realise this but the point I am trying to make is that corporations will fight tooth and nail to prevent the introduction of a consumption tax primarily because at the moment the are paying none. Their tax evasion puts an increased and unfair burden on income tax payers. A tax structure that lowers the income tax rate in preference to a consumption tax is a lot fairer and less complicated. Not that this will ever happen as the powerfull are benefiting most from the current system.

[askmeaboutpins]

man, it's cool the way anyone who tries to argue anything has their post deleted. such freedom, such open mindedness, such rationality.

[RMMHSRP]

Remember Lew Rockwell's maxim: It's not HOW they tax us, it's HOW MUCH they tax us. An as Dan has shown, new taxes always lead to higher overall taxes.
Oh, and Dan, tax loopholes are not corrupt. They are oases of freedom. Would that we had more of them.

[raystinsky]

@alcraig I agree that special treatment is wrong. I don't argue for special treatment, I argue for non-intervention. Favoritism is a form of interventionism.

[Futuramapwnsall]

@ajpmathwiz so if we have 30% income tax and a 25% VAT and 5-10% sales tax, I'm pretty sure we're boned too.

[matthewrichardson]

Does anyone know if a VAT tax causes corporations to consolidate into bigger companies so that they avoid the intermediate transactions?

[raystinsky]

@alcraig And if the corporation directly paid taxes, do you imagine the money they pay employees (for instance) would remain the same? I suppose you believe employers are bound to accept lower profit margins. In the late 1920s and 1930s, wage rates were fixed and in many cases kept above the profitable level. It worked out great.

[tommag]

Then they wonder why businesses and jobs are leaving the country in droves. We now have more government jobs than manufacturing jobs.

[Ovedya]

"'Cause I'm the tax man. Yeah, I'm the tax ma-a-annn, and you;re working for no one but me."