OT: WA to drown US in VAT

AFAUI, the tea partiers don't dare talk about touching medicare or social security. Interest on the debt can't be touched, and they like massive defense spending. That probably covers over 100% of revenue.

How can that possibly work out long term without big tax increases?

I'll look for it.

Best regards, Spehro Pefhany

--
"it's the network..."                          "The Journey is the reward"
speff@interlog.com             Info for manufacturers: http://www.trexon.com
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You aren't listening then. I've already told you to look at Paul Ryan's web site. *Many* tea partiers have fully bought into it. While not painless, won't be the road to disaster we're on now.

Because spending is cut to a manageable number. Yes, that means SS gets moved out (two more years, for those under 55, IIRC), and a pile of other social welfare changes.

But..but...ALL present taxes do not have to be abandoned; in fact it seems that this VAT will be ADDED to all other taxes. After all, the governments are desperate for money.

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Don't be silly. VAT is an up-graded - rather better worked out - version of sales tax, and would replace it. The remark to which your - inane - response is directed was trying to inform you about the way VAT works. Your response was just an uninformned right-wing knee jerk.

-- Bill Sloman, Nijmegen

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Regards,

Michael

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That was exactly the issue with Vermont's stupid gross receipts tax. It would have chased out all horizontal companies. A purely vertical organization, like perhaps maple syrup, wouldn't suffer much, but any manufacturing company would pay several times the tax. Tax what you don't want.

Depends on what you're talking about. Obummer's idiotic ideas, yes. Under the "Fair Tax", no, the income tax (and amendment XVI) is repealed. One will certainly finish off the country, the other might save it.

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You're clueless, as always (...and you're really ringing up those DimBulb points this week). The proposals on the table *now* impose the VAT *IN ADDITION* to all current taxes. The "Fair Tax", which is most certainly not a proposal by any in the current administration, is a replacement for all federal taxes.

That would make a USA implementation of VAT different from how VAT works in most countries where it is implemented.

In most countries with VAT, importers and wholesalers and other "middlemen" only pay VAT on the difference between selling price and buying price, as I understand this. That means "landing cost" (manufacturing materials and and shipping cost) of imports ("pro forma invoice" or "commercial invoice" amount) is not "added value".

If I got that wrong, then "landing cost" (materials/manufacturing and shipping) is taxed by VAT (which I favor), on a price below retail. The retailer and any middlemen between importer and retailer get to pay VAT on difference between selling and buying price. (Unless the retailer is the importer - and then VAT is simplified to be fully on retail price alone should it apply [which I favor] to value of imports.)

One benefit of a VAT: That punishes "middlemen" who don't actually produce anything by increasing paperwork requirements by them and/or those doing business with them. Paperwork cost reduction becomes a profit motive to force unproductive middlemen to find something more productive to do for a living.

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I would favor USA getting a VAT if accompanied by:

1. Reducing by 40-50% the tax rates on "ordinary income"

1. Reducing the tax rates on long term capital gains and "qualified dividends" only accordingly to extent of reducing those to 90% of the taxation rates on "ordinary income"

2. Indexing long term capital gains to inflation, even if only partially. (Such as deflating selling price according to inverse Consumer Price Index during the whole years between time of purchase and time of sale, even if further capped to not change a gain into a loss but merely to at-most reduce gain to zero.) (Taxpayers are allowed to refuse this option if they need to reduce their paperwork more than they need to reduce their taxation, such as if a taxpayer incurs a capital gain that is small before adjusting for inflation.)

1. Inheritance tax becomes 10% on wealth amassed beyond 2 million dollars

*for reasons other than inflation as measured by CPI* and excluding any wealth already taxed by inheritance tax previously (and inflation-adjusted afterwards). The inheritance tax was originally proposed to counterbalance families having more wealth being better able to make more money and gain power over others, as explained by the infamous R. Steve Walz many years ago. I think it should be at a rate merely sufficient to have a "stabilizing effect", as opposed to "punitive" or "confiscatory".

1. Corporate net income tax top rate is reduced to 10% at most, preferably less. If that is allowed to remain above zero, then exceptions, exemptions and deductions that each benefit less than 10% of corporations, corporations with less than 10% of national corporate income, or corporations in only 1 or 2 USA states or in specific industries, specific geolocical regions, specific climate regions, any financial figures or head-count figures in specific ranges, etc., *get abolished*. I have heard only a few years ago that a mere 6% of corporate profit is actually taxed. I would propose corporate taxation rate of 5% with a sweeping abolishment of exemptions/exceptions/deductions. That would force a lot of people working only to reduce taxability of those they work for to do actual productive work for a living.

2. Tax credits are reduced as much as "ordinary income" taxation rates are. That would include a 40-plus % reduction of the Earned Income Credit.

Since I propose corporations being more able to afford "living wages" to lower-paid employees, I correspondingly expect (should all of this come true) lower-wage employees to get, and demand-and-get, raises of their wage rates so that their slices of the allowed-to-grow pie do not shrink after taxation. (Maybe have my proposed rewriting of the USA "tax code" require employers benefiting from lower taxation of employers to pass some measure [preferably mild enough to be reasonable] of "spreading the wealth" to employees in order to fully enjoy my proposed taxation rate reductions.)

--
 - Don Klipstein (don@misty.com)

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As I understand VAT, someone buying goods taxed by VAT and then profitably selling goods taxed by VAT:

(whether or not with additional manufacturing work by the seller, such as if the seller's VAT-taxed purchases are of electronic components to assemble into boards or equipment, or if the seller purchases "raw materials" for purpose of selling "manufactured goods"...)

VAT is taxed on selling price, rebated by "reasonably-proving" VAT "already paid upstream".

Supposedly, the "full load of VAT" is normally a "same-rate sales tax" upon the "end user". "End users" have a low rate of paying anything else, let alone higher. Injustices (with condition of considering VAT to be not an injustice) tend to be limited to disputing how much each link in the "supply chain" has to pay out of the total. The "end user" needs to pay something towards VAT beyond what got paid upstream after rebates, since the supplier to the "end user" adds value to goods by making them retail-purchaseable in small quantities at a location convenient to small-quantity buyers, with displaying of goods to entice purchase by "end users", and with advertizing of availability of "such-goods-in- question", maybe at an "offer-for-sale" price lower than what is offered by "The Competition" (competitors to the hypothetical seller that I above-mentioned, which reality repeats "often-enough").

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 - Don Klipstein (don@misty.com)

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Except that "VAT" is a tax on "added value", not on "selling value". By definition, "VAT" has rebating downstream by VAT "provably-paid" ("my words") upstream.

The "End User" pays VAT on purchase price, and no more. The "supply chain" spreads the taxation upstream among themselves if they "do the paperwork". "Supply chain links" that are lazier with the paperwork get worse-hit. "More-vertical" companies covering more links of the "supply chain" get to enjoy "below-average" paperwork for buying dirt (or rocks) and retail-selling "retailed finished goods". (As in do all of the paperwork - and cost of that is only incurred 1 time as opposed to being repeatedly incurred by every entity in the "supply chain", and the "paperwork cost" is borne by "end users". Everyone in "The Supply Chain" needs to "profitably be there", with exception only for whatever "middlemen" who are "mere middlemen" that I believe need to do something more productive in order to make a living.

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 - Don Klipstein (don@misty.com)

The seller pays VAT on the full sale price, but reclaims any VAT already paid. An importer pays VAT on the full sale price, but there isn't any VAT to reclaim (for sales between EU countries, the exporter can reclaim any VAT paid prior to export; the country of final sale collects the full amount). A manufacturer pays VAT on the sale price and reclaims any VAT paid on raw materials or services used for manufacture.

VAT is a sales tax, insofar as the total amount paid is a proportion of the selling price. The difference is that the VAT payments are made at each transaction, rather than the entire amount being paid upon the "final" sale. Anyone who sells VAT-rated goods or services, at any point in the chain, must collect the tax and pass it on to the government, not just retailers.

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Who says there will be any "rebate"?? The Feds are desperate for money; they want a part of the "action" at every stage - that is what VAT stands for. Whether "value" is actually added or not, the fed wants money (a tax on what the FED thinks is added). Imports or internal - makes no difference. Sneeze on it, pay a tax.

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• NO rebates "wanted" by the FED. I said NOTHING about selling value which, as far as the FED is concerned,could be ZERO. A disty buys parts, stocks them and re-sells them; the stocking ALONE is considered -->value added

On Jun 21, 4:47=A0pm, " snipped-for-privacy@att.bizzzzzzzzzzzz" wrote: [....]

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No, I am right and you are just an ignorant twit. I was going to just let your stupid posts slide, but this time I have had my fill of BS from folks who don't know what they are talking about.

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If the tax paid is *not* rebated it is not a VAT. Under a VAT only the *VALUE ADDED* is taxed. The way that's commonly done is to tax every purchase and then rebate the taxes paid when the widget is resold. If the rebate isn't there it's a "Gross Receipts" tax (a tax on the gross from each transaction).

Words mean things.

What's 10% of zero?

Not if the disty bought them for a dollar.

It is the method to determine the VALUE ADDED. (Cost_out - Cost_in)*VAT% = taxes owed. The disty pays Cost_out*VAT and is rebated Cost_in*VAT. In reality he pays (Cost_out - Cost_in)*VAT%. The "rebate" is paid to one's self as a deduction.

That too, but not for the reasons you believe.

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Understand what a VAT is. It has been explained any number of times to you.

They don't tax the entire value at every stage! ..."only" the value that has been added (hence "Value Added Tax").

No, the tax is on what *has* been added.

Right. The importer claims a zero value on import. He then pays the VAT on the entire Magilla. After that, everyone who touches the widget pays VAT on the difference between price and cost.

But not on the entire price at each step.

Wrong, you've demonstrated that you're clueless enough to be a charter member of the DimBulb club. ...always wrong.