SintonFan
06-04-2009, 11:13 PM
Please keep this non-political!
Many editorials are saying a National Value Added(VAT) Tax is gaining ground. I find that hard to believe. Do any of you know what a VAT is? It's a tax on everything you buy, but you might not see it. It is not just inflationary but a big reason why European countries don't grow like we do and know all about the word "stagflation".
As a business owner:
Let's say I sell a widget for $1.75(as I do now). You the buyer, buys a widget for exactly that sum of money and pay the according taxes(if applicable).
Under the VAT, as a business owner it changes:
Between the producer, supplier and me the retailer, the cost of my widget will suddenly be up to about 25% more because a Value Added Tax is aimed at where you can't see the actual tax. The tax itself is there before the consumer sees it; it is between the producer being taxed to sell his/her product to the supplier, the supplier being taxed to sell his/her product and finally the retailer being taxed to sell his/her product. So because the chain of the "sell" is taxed the consumer only notices a much larger price. The widget I sell was $1.75... it is now $2.19 with a VAT. Sneaky Sneaky!
The tax is mandatory when put into place and will lead to much higher inflation(at 25%):
A $10 shirt will be $12.50
A quart of oil at $3.00 will be $3.75
A $20,000 Honda will be $25,000
A $1000 computer will be $1250
This all is without considering food. Very very Sneaky.
.
I'll post a link after the entire article from the Caller Times:
A national value added tax gains ground
With the federal government running trillion dollar deficits, revenues flat and President Barack Obama’s ambitious health-care plan to pay for, it was inevitable that the value added tax would make one of its periodic appearances in the nation’s capital.
The VAT is a sort of national sales tax, although it differs from the typical sales tax in that the VAT is imposed only on the increase in value as it goes from producer to wholesaler to retailer to the consumer, who ultimately bears the entire cost.
The VAT, its critics will be delighted to know, is an invention of the French who have had one since the 1950s. The United States is one of a handful of major nations that does not have one. The European nations do, running in the 18 percent to 25 percent range. Canada has a relatively modest VAT — called the Goods and Services Tax — of 5 percent, with exceptions for things like groceries.
“The Washington Post” notes that there is increased chatter about the VAT among tax experts, some of whom have pressed the idea on Treasury Secretary Timothy Geithner. And the chairman of the Senate Budget Committee, Sen. Kent Conrad, D-N.D., is said to be open to the idea.
The disadvantages of the VAT are that it is regressive, initially inflationary and easy for lawmakers to raise incrementally.
The advantages are that it can be relatively simple to administer, hard to evade and it raises an absolute ton of money. Also, in theory it would allow us to do away with large parts of the income tax.
“The Post” cites a paper published in the “Virginia Tax Review” that says a 25 percent VAT, a level common in Western Europe, would raise enough money to balance the budget, pay for health-care reform, exempt millions of families from the income tax and allow the top income tax rate to be slashed to 25 percent.
With other ideas for major revenue raisers, like the cap-and-trade scheme for greenhouse gases, losing momentum, the VAT will likely start to pick up tacit support in Congress. But, even assuming it could be sold to the voters, the VAT makes sense only as part of broad-scale tax reform and simplification. Otherwise, we could end up with the worst of all: three taxes — the income, the alternative minimum and the value added.
.
Link (http://www.caller.com/news/2009/may/30/national-value-added-tax-gains-ground/)
.
Ask yourself, do you want a FAT VAT?
Many editorials are saying a National Value Added(VAT) Tax is gaining ground. I find that hard to believe. Do any of you know what a VAT is? It's a tax on everything you buy, but you might not see it. It is not just inflationary but a big reason why European countries don't grow like we do and know all about the word "stagflation".
As a business owner:
Let's say I sell a widget for $1.75(as I do now). You the buyer, buys a widget for exactly that sum of money and pay the according taxes(if applicable).
Under the VAT, as a business owner it changes:
Between the producer, supplier and me the retailer, the cost of my widget will suddenly be up to about 25% more because a Value Added Tax is aimed at where you can't see the actual tax. The tax itself is there before the consumer sees it; it is between the producer being taxed to sell his/her product to the supplier, the supplier being taxed to sell his/her product and finally the retailer being taxed to sell his/her product. So because the chain of the "sell" is taxed the consumer only notices a much larger price. The widget I sell was $1.75... it is now $2.19 with a VAT. Sneaky Sneaky!
The tax is mandatory when put into place and will lead to much higher inflation(at 25%):
A $10 shirt will be $12.50
A quart of oil at $3.00 will be $3.75
A $20,000 Honda will be $25,000
A $1000 computer will be $1250
This all is without considering food. Very very Sneaky.
.
I'll post a link after the entire article from the Caller Times:
A national value added tax gains ground
With the federal government running trillion dollar deficits, revenues flat and President Barack Obama’s ambitious health-care plan to pay for, it was inevitable that the value added tax would make one of its periodic appearances in the nation’s capital.
The VAT is a sort of national sales tax, although it differs from the typical sales tax in that the VAT is imposed only on the increase in value as it goes from producer to wholesaler to retailer to the consumer, who ultimately bears the entire cost.
The VAT, its critics will be delighted to know, is an invention of the French who have had one since the 1950s. The United States is one of a handful of major nations that does not have one. The European nations do, running in the 18 percent to 25 percent range. Canada has a relatively modest VAT — called the Goods and Services Tax — of 5 percent, with exceptions for things like groceries.
“The Washington Post” notes that there is increased chatter about the VAT among tax experts, some of whom have pressed the idea on Treasury Secretary Timothy Geithner. And the chairman of the Senate Budget Committee, Sen. Kent Conrad, D-N.D., is said to be open to the idea.
The disadvantages of the VAT are that it is regressive, initially inflationary and easy for lawmakers to raise incrementally.
The advantages are that it can be relatively simple to administer, hard to evade and it raises an absolute ton of money. Also, in theory it would allow us to do away with large parts of the income tax.
“The Post” cites a paper published in the “Virginia Tax Review” that says a 25 percent VAT, a level common in Western Europe, would raise enough money to balance the budget, pay for health-care reform, exempt millions of families from the income tax and allow the top income tax rate to be slashed to 25 percent.
With other ideas for major revenue raisers, like the cap-and-trade scheme for greenhouse gases, losing momentum, the VAT will likely start to pick up tacit support in Congress. But, even assuming it could be sold to the voters, the VAT makes sense only as part of broad-scale tax reform and simplification. Otherwise, we could end up with the worst of all: three taxes — the income, the alternative minimum and the value added.
.
Link (http://www.caller.com/news/2009/may/30/national-value-added-tax-gains-ground/)
.
Ask yourself, do you want a FAT VAT?