Value added tax, (VAT)

I'm Supposn said:

ValueAdded Tax, (i.e. VAT) compared to prior conventional sales taxmethods.



Unlikeany other sales tax method, VAT does not any manner increase pricesby additionally taxing the sales taxes levied within previous salestransactions. After the first transaction link of a chain oftransactions, given the same tax rate, numbers of prior commercialtransactions, and prices for each transaction (excluding thetransaction taxes), the total government revenue is less for VAT andgreater for the other conventional sales tax methods. That’s dueto not taxing the additional costs of prior Vat taxes.


Commercialentities provide to the government and to the purchasers, their VATpaper work that is very similar to what they would provide withinother (older) sales tax methods but they subtract the VAT they paidfrom the VAT they collected and pass only the difference onto thegovernment.

Thisbusiness-friendly method is particularly beneficial to smallbusinesses because cash flow is among their major problems.Purchasers do not pay VATs upon VATs imbedded within each priortransaction link within a chain of VAT transactions.

Undera VAT system commercial purchasers do not request that theirpurchases not be documented or the full prices not be revealed(because they deduct the VAT they paid from the VAT they collected(on behalf of the government). VAT tax evasion is more difficult,riskier and less profitable (than evading the older conventionalsales tax method). This increases government’s revenues and reducesenforcement expenses.

I’maware of advantages to VAT compared to other sales tax methods but nodisadvantages. Many nations have enacted VAT and/or transformed theirprior sales tax method to a VAT.

Respectfully,Supposn

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I'm Supposn said:

Value Added Tax, (i.e. VAT) compared to prior conventional sales tax methods.

Unlike any other sales tax method, VAT does not any manner increase prices by additionally taxing the sales taxes levied within previous sales transactions. After the first transaction link of a chain of transactions, given the same tax rate, numbers of prior commercial transactions, and prices for each transaction (excluding the transaction taxes), the total government revenue is less for VAT and greater for the other conventional sales tax methods. That’s due to not taxing the additional costs of prior Vat taxes.

Commercial entities provide to the government and to the purchasers, their VAT paper work that is very similar to what they would provide within other (older) sales tax methods but they subtract the VAT they paid from the VAT they collected and pass only the difference onto the government.

This business-friendly method is particularly beneficial to small businesses because cash flow is among their major problems. Purchasers do not pay VATs upon VATs imbedded within each prior transaction link within a chain of VAT transactions.

Under a VAT system commercial purchasers do not request that their purchases not be documented or the full prices not be revealed (because they deduct the VAT they paid from the VAT they collected (on behalf of the government). VAT tax evasion is more difficult, riskier and less profitable (than evading the older conventional sales tax method). This increases government’s revenues and reduces enforcement expenses.

I’m aware of advantages to VAT compared to other sales tax methods but no disadvantages. Many nations have enacted VAT and/or transformed their prior sales tax method to a VAT.

Respectfully, Supposn

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blueliner7 said:

Are you suggesting a VAT system replace income taxes and corporate taxes or that it be levied in addition to those taxes?

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I'm Supposn said:

FICA tax proposal:
FICA is the most regressive federal tax. It’s particularly a burden upon the working poor and their dependents. …

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I'm Supposn said:

BlueLiner7, refer to
BlueLiner7, I'm a proponent of incrementally enacting the “Fair Tax”; each individual step would simultaneously reduce taxes upon incomes. increase a federal general sales tax rate, and enact additional provisions for the poor that would otherwise be detrimentally impacted.

After one of the incremental steps, the sales tax will approach an unacceptable rate. We will be unable to continue the transference of tax revenue sources. At that point we will have a sales tax and income taxes that are applicable to much fewer taxpayers.
Those with annual incomes somewhat less than USA's median income will not be subject to income taxes. Many USA states and foreign governments levy both taxes upon sales and upon incomes. Their are economic net advantages for doing this.

I advocate that the first incremental step should reduce our current FICA payroll taxes from 15.3% to 6.2%. the 9.1% taxes upon payrolls can be adequately replaced with a 4.55% general sales tax.
The 7.65% tax upon employees wages is so regressive that even if government made no additional provisions for the poor, this particular step would still be economically justified.

Respectfully, Supposn

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blueliner7 said:

The Fair Tax is not a VAT so correct me if I'm wrong but what you'd like to see is federal sales tax, a VAT, reduced payroll taxes and income tax for most Americans. That doesn't sound like a very good deal.

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I'm Supposn said:

BlueLiner, refer to the thread,
https://www.debatepolitics.com/economics/288632-fica-tax-proposal.html .

The proposal's for reducing the 15.3% FICA payroll tax to 6.2%, reduces every employer and their employees' taxes by 9.1% of their taxes based upon their payrolls. The reduced FICA tax is replaced with a 4.55% sales tax.
Based upon USA's total payrolls being 1/3 the prices of sales transactions subject to the proposed general sales tax:

The FICA tax reduction increases employees net wages by more than 4%.

Because FICA increases current and future prices of USA produced products, that proposed 4.55% general sales tax increases prices of sales taxable products by 1.725%
and decreases prices of non sales taxable products by 0.9417%, (i.e. less than 1%).

Fully considering the increase of prices, that increases employees and their families' wages' purchasing powers for products subject to sales tax by 1.5% of their current net wages.

Increases tax revenues to better enable retaining future Medicare and Social Security benefits without increasing taxes upon the working poor.

Respectfully, Supposn

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blueliner7 said:

You authored a thread about the VAT. You've now tried twice to get me to post in a different thread. Do you want to talk about VAT or not? I'm not going to a different thread to talk to you about VAT.

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I'm Supposn said:

Value Added Tax, (i.e. VAT) compared to prior conventional sales tax methods. ...

... Under a VAT system commercial purchasers do not request that their purchases not be documented or the full prices not be revealed (because they deduct the VAT they paid from the VAT they collected (on behalf of the government). VAT tax evasion is more difficult, riskier and less profitable (than evading the older conventional sales tax method). This increases government’s revenues and reduces enforcement expenses.
I’m aware of advantages to VAT compared to other sales tax methods but no disadvantages. Many nations have enacted VAT and/or transformed their prior sales tax method to a VAT.

Respectfully, Supposn

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I'm Supposn said:

Regarding VAT;

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blueliner7 said:

And I already responded to that post. Do you not read your own threads?

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I'm Supposn said:

BlueLiner7, I provided my argument refuting your commenting a “ federal sales tax, a VAT, reduced payroll taxes and income tax for most Americans. That doesn't sound like a very good deal”.
Other than stating your disagreement to my posts within this thread, you've not offered your logical arguments refuting them.

You haven't (within this thread) argued against the proposal regarding FICA presented within the thread, https://www.debatepolitics.com/economics/288632-fica-tax-proposal.html ; you haven't argued against my reasons (stated within this thread), that support my contending VAT is the superior method of administrating a general sales tax.

Respectfully, Supposn

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blueliner7 said:

The Fair Tax is not a VAT so correct me if I'm wrong but what you'd like to see is federal sales tax, a VAT, reduced payroll taxes and income tax for most Americans. That doesn't sound like a very good deal.

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blueliner7 said:

Do you want to talk in this thread or in a different thread? Either talk about the VAT or go spend your time in that other thread, alright? If all you wanted to do was give me links to a different thread then why did you start this one in the first place?

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I'm Supposn said:

ValueAdded Tax, (i.e. VAT) compared to prior conventional sales taxmethods.



Unlikeany other sales tax method, VAT does not any manner increase pricesby additionally taxing the sales taxes levied within previous salestransactions. After the first transaction link of a chain oftransactions, given the same tax rate, numbers of prior commercialtransactions, and prices for each transaction (excluding thetransaction taxes), the total government revenue is less for VAT andgreater for the other conventional sales tax methods. That’s dueto not taxing the additional costs of prior Vat taxes.


Commercialentities provide to the government and to the purchasers, their VATpaper work that is very similar to what they would provide withinother (older) sales tax methods but they subtract the VAT they paidfrom the VAT they collected and pass only the difference onto thegovernment.

Thisbusiness-friendly method is particularly beneficial to smallbusinesses because cash flow is among their major problems.Purchasers do not pay VATs upon VATs imbedded within each priortransaction link within a chain of VAT transactions.

Undera VAT system commercial purchasers do not request that theirpurchases not be documented or the full prices not be revealed(because they deduct the VAT they paid from the VAT they collected(on behalf of the government). VAT tax evasion is more difficult,riskier and less profitable (than evading the older conventionalsales tax method). This increases government’s revenues and reducesenforcement expenses.

I’maware of advantages to VAT compared to other sales tax methods but nodisadvantages. Many nations have enacted VAT and/or transformed theirprior sales tax method to a VAT.

Respectfully,Supposn

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bearpoker said:

I like the VAT. Anything to get out of filing a tax return. I never liked arithmatic, and tax returns remind me too much of grade school homework. The only problem I have with the VAT is that it's kind of sneaky. The public isn't aware of how much they're really paying.

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Fearandloathing said:

That explanation isn't anywhere near what is a VAT.

The first application of the tax is when it was first sold. Say you grow a rose and sell it for $10. You now owe $.10 to the government. But you have already charged the customer 10%. So when the nursery sells the rose for $25, the nursery owes the government $.25 but subtract what you "paid" on the original sale $.10, for $.15

The best advantage along with being a cash cow, is that it applies to everything, groceries to cars etc. The downside is that is hugely expensive to track by the companies and may tend to reduce large ticket items.

It is said to be the fairest form of tax but people fight it because they see it on every purchase. But if you reduce or remove income tax, you have a gem.

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I'm Supposn said:

BlueLiner7, your post doesn't specify what “ doesn't sound like a very good deal”​?
You don't present any logical argument opposing VAT, or the FICA proposal, or the Fair-tax, or opposing the contention that the fair tax should not be enacted to replace our entire income tax system within a single year.
Although the topics are related to each other, we agree they're three separate topics.

I mention the FICA proposal because FICA's our most regressive federal tax, reducing it would be of the greatest economic benefit to USA's working poor. If we should enact anything similar to the Fair-tax, reducing FICA would be of greater economic benefit, and should be among the first federal taxes to be reduced.

Respectfully, Supposn

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Fearandloathing said:

That explanation isn't anywhere near what is a VAT.

The first application of the tax is when it was first sold. Say you grow a rose and sell it for $10. You now owe $.10 to the government. But you have already charged the customer 10%. So when the nursery sells the rose for $25, the nursery owes the government $.25 but subtract what you "paid" on the original sale $.10, for $.15

The best advantage along with being a cash cow, is that it applies to everything, groceries to cars etc. The downside is that is hugely expensive to track by the companies and may tend to reduce large ticket items.

It is said to be the fairest form of tax but people fight it because they see it on every purchase. But if you reduce or remove income tax, you have a gem.

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I'm Supposn said:

Fearandloathing, let's continue to use your 10% example for the sake of simplicity.

The grower sold a rose to a nursery for $10 + $1 VAT. The grower does not remit the entire $1 to the government because the grower retained documentation of the Vats they paid in the course of conducting their business. I suppose the grower could remit nothing and file an application for credit if the growers VAT expenses exceeded $1. But let us assume that the grower paid only $2.20 gross for goods and services applicable to the 10% VAT. That's not unreasonably low because VAT isn't levied upon some very explicitly specified products or services. Growers and all other enterprises do not for example pay VAT to their employees. That's an expense upon which the grower pad no VAT. In this case, the grower does not remit $1.00 to the government; the grower remits $0.80 .

The nursury sold the rose for $25.00 + $2.50 VAT. But the nursery paid $15 + $1.50 VAT, (which includes the 0.80) . The nursery remits $1.00 to the government.

The rose is now sitting in the nursury's inventory at a cost of more than $15 to the nursery The government has received thus far exactly $1.50 in VAT taxes related to that rose.

What's your complaint?

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Fearandloathing said:

No. I don't understand any of that

Start with the production of an item. I chose a potted plant for simplicity. The nursery will pay VAT on all his needs, including coffee for the office, pens etc soil seeds, heating, furniture and supplies, including gas and oil, even funerals.

The nursery then sells that plant for $10, and charges the end user $.50 for for each plant sold. Let's say he sells 100. He now owes $5.00 VAT, LESS all VAT he has paid in the quarter (or year)

If he spent $10 VAT on materials etc. he would be eligible for a rebate likely greater than $5.

5% tax is paid at every level from conception until use.

At each level the tax is calculated and paid by the buyer, collected and remitted at tax time by the seller, at LESS all VAT tax paid in that quarter.

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