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Thread: Does Rand Support a VAT Tax?

  1. #31
    Those who entertain the notion of a VAT obviously have never purchased a manufactured item in Great Britain.



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  3. #32
    Quote Originally Posted by Root View Post
    Sounds like a system full of black market opportunities.
    Criminal organizations made bank in the EU when VAt was introduced.
    http://moneyweek.com/how-carousel-fr...tem-in-a-spin/
    https://en.wikipedia.org/wiki/Missing_trader_fraud



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  5. #33
    Quote Originally Posted by TommyJeff View Post
    Thank you. I will take a closer look at this tax plan. I am not an expert either. Hopefully Rand can explain this possible situation.

    But, if there is a 'limited VAT' in this plan(or any plan, talking in more of a theoretical perspective). Couldnt the rates of this 'VAT' be increased at a future date, causing a bigger problem on a tax most people cant 'see'?
    Here is what his website says:
    I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations. This tax would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment. All capital purchases would be immediately expensed, ending complicated depreciation schedules.
    Any business tax is a hidden tax on product prices.

  6. #34
    Quote Originally Posted by sparebulb View Post
    Those who entertain the notion of a VAT obviously have never purchased a manufactured item in Great Britain.
    No one here is proposing a VAT in addition to existing taxes; it would be a replacement.

    Yes, living expenses would rise, but you'd have much more in the paycheck to cover it.

  7. #35
    Quote Originally Posted by TaftFan View Post
    Any business tax is a hidden tax on product prices.
    Any tax will reduce living standards.

    Whether the immediate effect is to lower income (as with income tax) or raise prices (as with VAT) is irrelevant.
    Last edited by r3volution 3.0; 11-15-2015 at 11:39 PM.

  8. #36
    Quote Originally Posted by The Gold Standard View Post
    Let's have it then! I'm always excited to find new ways I can support my government and make sure they get enough revenue.
    Think of it this way: if you're going to be robbed, and the robber is going to bill you for his expenses (gun, mask, etc), do you want his expenses to be higher or lower?

    A more efficient tax system (like VAT) means the government has to spend less (of your) money to rob you.

    It's a good thing.

  9. #37
    Quote Originally Posted by r3volution 3.0 View Post
    Any tax will reduce living standards.

    Whether the immediate effect is to lower income (as with income tax) or raise prices (as with VAT) is irrelevant.
    It matters because people vote and therefore taxes need to be very transparent.

  10. #38
    Quote Originally Posted by TaftFan View Post
    It matters because people vote and therefore taxes need to be very transparent.
    I'd say VAT's actually more visible than income tax.

    You see the income tax only once a year, or once a pay-check.

    You see VAT every time you go shopping.

  11. #39
    It may just largely depend on what exactly is in the vat.

  12. #40
    Quote Originally Posted by r3volution 3.0 View Post
    Why?

    VAT is one of the most efficient forms of taxation.

    It eliminates most of the administrative and compliance costs associated with the income tax.
    What the...

    Since when is being a more efficient form of taxation a good thing?
    Last edited by erowe1; 12-03-2015 at 09:11 AM.



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  14. #41
    Quote Originally Posted by r3volution 3.0 View Post
    You see VAT every time you go shopping.
    Only if the receipt includes the breakdown of taxes included in the final cost.

  15. #42
    Quote Originally Posted by erowe1 View Post
    What the...

    Since is being a more efficient form of taxation a good thing?
    Since always

    Tax A -- It costs the government $1 to collect $100. The government needs $1000, so it actually has to raise $1010 ($1000 + $10 collection costs).

    Tax B -- It costs the government $1 to collect $50. The government needs $1000, so it actually has to raise $1020 ($1000 + $20 collection costs).

    ...under which are the people paying more total taxes?

    As I said earlier: if the robber robbing you is going to bill you for his expenses, do you want his expenses to be higher or lower?

    Quote Originally Posted by erowe1 View Post
    Only if the receipt includes the breakdown of taxes included in the final cost.
    True, but that's easy enough.

    Where I live, sales tax is noted on every receipt - not sure if this is a legal requirement or if businesses do this voluntary.

    Either way, the same could be done with VAT.
    Last edited by r3volution 3.0; 11-16-2015 at 01:25 PM.

  16. #43
    Quote Originally Posted by r3volution 3.0 View Post
    True, but that's easy enough.

    Where I live, sales tax is noted on every receipt - not sure if this is a legal requirement or if businesses do this voluntary.

    Either way, the same could be done with VAT.
    That would be pretty difficult. Each stage of the production and resale of the product would have to keep track of their VAT and VATs that came earlier in the chain. And even if the initial law required them to do this, it would be easy to repeal that part.

  17. #44
    Quote Originally Posted by erowe1 View Post
    That would be pretty difficult. Each stage of the production and resale of the product would have to keep track of their VAT and VATs that came earlier in the chain.
    10% VAT

    ---raw material producer sells wheat for $100, collects $10 tax and sends to government

    ---manufacturer sell bread for $150, collects $15 and sends $5 ($15 - $10) to government

    ---wholesaler sells bread for $200, collects $20 and sends $5 ($20 - $15) to government

    ---retailer sells bread for $300, collects $30 from end user and sends $10 ($30 - $20)) to government

    The total tax paid as a good passes through the production chain ($10 + $5 + $5 + $10) equals the final sale price x the VAT rate ($30).

    So, to put VAT on his customer's receipt, the retailer doesn't need any information from any other firms higher up the supply chain.

    He just needs to know the VAT rate and the sale price of his own product.

    Just like sales tax, easy.

  18. #45
    Quote Originally Posted by r3volution 3.0 View Post
    10% VAT

    ---raw material producer sells wheat for $100, collects $10 tax and sends to government

    ---manufacturer sell bread for $150, collects $15 and sends $5 ($15 - $10) to government

    ---wholesaler sells bread for $200, collects $20 and sends $5 ($20 - $15) to government

    ---retailer sells bread for $300, collects $30 from end user and sends $10 ($30 - $20)) to government

    The total tax paid as a good passes through the production chain ($10 + $5 + $5 + $10) equals the final sale price x the VAT rate ($30).

    So, to put VAT on his customer's receipt, the retailer doesn't need any information from any other firms higher up the supply chain.

    He just needs to know the VAT rate and the sale price of his own product.

    Just like sales tax, easy.
    A nightmare

  19. #46
    Quote Originally Posted by timosman View Post
    A nightmare
    Because reasons?

  20. #47
    Quote Originally Posted by r3volution 3.0 View Post
    Because reasons?
    Just look at the number of transactions.

  21. #48
    Quote Originally Posted by timosman View Post
    Just look at the number of transactions.
    Yes, economies are complicated.

    We should have one firm producing everything!



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  23. #49
    Chester Copperpot
    Member

    Quote Originally Posted by Quark View Post
    Not a fan of VAT, even with its advantages over other forms of taxation in terms of market disruptions. Sales taxes are easier to evade than VAT's. Since I buy quite a lot of my things online, I rarely pay sales tax in my state. Food and clothing are untaxed here, and those are the only two things that I commonly don't buy online. And all of the countries that have VAT's also tend to have progressive income taxes as well. The VAT is rarely instead of progressive incomes taxes, and most often in addition to them.

    I like Ron Paul's view on the income tax, it should be flat, really flat, as in zero. And we shouldn't replace it with anything. I understand that Rand has to make the budget work on paper, but I hope that is all it is.
    AGREED

  24. #50
    Quote Originally Posted by r3volution 3.0 View Post
    Yes, economies are complicated.

    We should have one firm producing everything!

  25. #51
    ^^^I was being sarcastic, of course.



    I understand that you're complaining about the number of VAT-related transactions.

    As to that, I don't see the problem. All that firms have to do is (1) apply the VAT on their sales to their customers, and (2) keep track of what VAT they paid in transactions with their suppliers, and then (3) subtract the one from the other and send a check in that amount to the IRS once a year/quarter/whatever. Since every firm is already, VAT or no VAT, keeping track of what their customers paid them, and what they paid their suppliers...what's the big deal?

    Seems to be that firms would spend far less time/money/effort complying with VAT than with the byzantine corporate income tax.

    ...and, obviously, for the vast majority of people, who don't own businesses, compliance costs drop to zero. No interaction with the IRS ever, at all.
    Last edited by r3volution 3.0; 11-16-2015 at 02:45 PM.

  26. #52

  27. #53
    Quote Originally Posted by navy-vet View Post
    NO MORE TAX SCHEMES!
    The present tax system is the best possible?

  28. #54
    Tell me again why a VAT is preferable to a one time sales tax?

  29. #55
    Quote Originally Posted by TaftFan View Post
    Tell me again why a VAT is preferable to a one time sales tax?
    harder to evade ---> smaller IRS --> lower government spending

  30. #56
    Quote Originally Posted by r3volution 3.0 View Post
    ^^^I was being sarcastic, of course.



    I understand that you're complaining about the number of VAT-related transactions.

    As to that, I don't see the problem. All that firms have to do is (1) apply the VAT on their sales to their customers, and (2) keep track of what VAT they paid in transactions with their suppliers, and then (3) subtract the one from the other and send a check in that amount to the IRS once a year/quarter/whatever. Since every firm is already, VAT or no VAT, keeping track of what their customers paid them, and what they paid their suppliers...what's the big deal?

    Seems to be that firms would spend far less time/money/effort complying with VAT than with the byzantine corporate income tax.

    ...and, obviously, for the vast majority of people, who don't own businesses, compliance costs drop to zero. No interaction with the IRS ever, at all.
    As a business owner, I'd much prefer a tax system in the form Rand is proposing than the present tax system any day.
    "Those who slumber on the path to tyranny, sink on the river to freedom." - Brett D.

    "I am not attacking you Eric. I am stating historical fact. Leon Trotsky taught Leo Straus everything he knew about Communism. Leo Straus set up shop at the University of Chicago. There Straus mentored and educated the godfather of the neoconservative movement, Kristol the Elder. See? It is not an attack, it is a statement of historical fact." - Random RP Supporter Spreading Some Love



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  32. #57
    Just imagine a manufacturer to produce a product purchases 20 items from 20 different companies will now pay 14.5% tax on each of those 20 items rather than the current 0%. In many cases the manufacturer does not sell directly to retail, you have the middle man - the reseller. The reseller then pays 14.5% tax on the purchases from the manufacturer up from 0%. Then you have the retailer that purchases the item from the reseller. The retailer then pays 14.5% up from 0%.

    That is quite a bit of new tax for a single product that did not exist before and will increase the sale price of the product at retail. The higher costs at retail will certainly hurt low income folks like the poor and the elderly the most.
    * See my visitor message area for caveats related to my posting history here.
    * Also, I have effectively retired from all social media including posting here and are basically opting out of anything to do with national politics or this country on federal or state level and rather focusing locally. I may stop by from time to time to discuss philosophy on a general level related to Libertarian schools of thought and application in the real world.

  33. #58
    Quote Originally Posted by kahless View Post
    Just imagine a manufacturer to produce a product purchases 20 items from 20 different companies will now pay 14.5% tax on each of those 20 items rather than the current 0%. In many cases the manufacturer does not sell directly to retail, you have the middle man - the reseller. The reseller then pays 14.5% tax on the purchases from the manufacturer up from 0%. Then you have the retailer that purchases the item from the reseller. The retailer then pays 14.5% up from 0%.

    That is quite a bit of new tax for a single product that did not exist before and will increase the sale price of the product at retail. The higher costs at retail will certainly hurt low income folks like the poor and the elderly the most.
    Yes, the VAT is less progressive than the income tax.

    The rich will still pay more (they buy more stuff), but not by as large a margin.

    *shrug*

    ...to my mind, the goal in tax reform is not to make them "fair," but to make them lower overall and more efficient.

  34. #59
    Quote Originally Posted by Krugminator2 View Post
    Singapore, Hong Kong, and Switzerland are all far more economically free than the US and spend far less and they all have VATs
    This is not true. Hong Kong does not have VAT.

  35. #60
    Quote Originally Posted by r3volution 3.0 View Post
    harder to evade ---> smaller IRS --> lower government spending
    I want taxes that are easier for me to evade.

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