Does Rand Support a VAT Tax?

[timosman]

Keep in mind in most of the countries VAT is about 20%. Let it sink - 20% Federal Sales Tax.

 

[The Gold Standard]

Keep in mind in most of the countries VAT is about 20%. Let it sink - 20% Federal Sales Tax.

And those countries aren't the policemen of the world. They are, in fact, subsidized by the policemen of the world.

 

[Krugminator2]

Oh, well that's a relief. The Heritage Economic Freedom Ranking means the world to me. Let's have it then! I'm always exciting to find new ways I can support my government and make sure they get enough revenue.

His plan leads to much less revenue. How do you not know that and have such strong opinion?

So if he proposed purely a national sales and got rid of every other tax, would you oppose that too? I guess you must because it is a new tax.

Keep in mind in most of the countries VAT is about 20%. Let it sink - 20% Federal Sales Tax.

The Fair Tax that Gary Johnson and John Stossel endorse is a 23% sales tax. That would be my ideal but it will never pass.

 

[r3volution 3.0]

huh?

1. VAT is largely self-policing (= fewer IRS goons = smaller IRS budget). At each stage of production, each firm collects tax from its customers and pays tax to its suppliers, and remits the difference to the government. Suppose a firm wanted to evade by failing to report a sale (i.e. keeps the tax on that sale for itself, rather than sending it along to the government). That's not going to work, because the counterparty to that sale is going to report the sale, so the figures sent into the government by the two firms won't match, and the evader will be easily caught. Why will the counterparty report the sale? Because that reduces his own tax liability. Hence, self-policing.

2. The mere fact that the government deals with businesses rather than individuals (lots more of latter than former) makes for lower administrative costs.

3. Much of the administrative burden is shifted onto business; private enterprises (profit motive) will tend to find ways of doing it more cheaply than government.

4. As for compliance costs, it's altogether simpler than the income tax and - again - would affect far fewer people (H&R Block, however, will not be pleased).

 

[specsaregood]

Anyone who supports a VAT tax can go fuck themselves.

His father said he would prefer VAT over our current system as well. The only reason he didn't push the Fairtax was that he didn't think it ensured elimination of the income tax as a prerequisite.

I recall him pointing out that you can avoid a VAT tax; and that it helps promote saving over spending.

 

[Quark]

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.

 

[timosman]

1. VAT is largely self-policing (= fewer IRS goons = smaller IRS budget). At each stage of production, each firm collects tax from its customers and pays tax to its suppliers, and remits the difference to the government. Suppose a firm wanted to evade by failing to report a sale (i.e. keeps the tax on that sale for itself, rather than sending it along to the government). That's not going to work, because the counterparty to that sale is going to report the sale, so the figures sent into the government by the two firms won't match, and the evader will be easily caught. Why will the counterparty report the sale? Because that reduces his own tax liability. Hence, self-policing.

2. The mere fact that the government deals with businesses rather than individuals (lots more of latter than former) makes for lower administrative costs.

3. Much of the administrative burden is shifted onto business. This is good, because private enterprises (profit motive) will tend to find ways of doing it more cheaply than government.

4. As for compliance costs, it's altogether simpler than the income tax and - again - would affect far fewer people (H&R Block, however, will not be pleased).

You are engaging in deception. From the end user perspective the internal mechanics of VAT are not relevant. It is no different than the sales tax.

The amount of scrutiny businesses are going to be subjected to will increase, as government will have the ability to track closely the entire manufacturing process. Not sure how this will result in lower overhead and fewer bureaucrats?

 

[r3volution 3.0]

You are engaging in deception. From the end user perspective the internal mechanics of VAT are not relevant.

They are if the end user wants to reduce government spending.

It is no different than the sales tax.

From the end user perspective, that's right.

And?

The amount of scrutiny businesses are going to be subjected to will increase, as government will have the ability to track closely the entire manufacturing process. Not sure how this will result in lower overhead and fewer bureaucrats?

See point #1 in my last post.

 

[The Gold Standard]

His plan leads to much less revenue. How do you not know that and have such strong opinion?

So if he proposed purely a national sales and got rid of every other tax, would you oppose that too? I guess you must because it is a new tax.

I will always oppose every tax. If he were to propose a national sales tax on the condition that the 16th amendment was repealed first, then I wouldn't bitch about it.

 

[Root]

1. VAT is largely self-policing (= fewer IRS goons = smaller IRS budget). At each stage of production, each firm collects tax from its customers and pays tax to its suppliers, and remits the difference to the government. Suppose a firm wanted to evade by failing to report a sale (i.e. keeps the tax on that sale for itself, rather than sending it along to the government). That's not going to work, because the counterparty to that sale is going to report the sale, so the figures sent into the government by the two firms won't match, and the evader will be easily caught. Why will the counterparty report the sale? Because that reduces his own tax liability. Hence, self-policing.

Sounds like a system full of black market opportunities.

 

[sparebulb]

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

 

[specsaregood]

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-fraud-is-putting-the-vat-system-in-a-spin/
https://en.wikipedia.org/wiki/Missing_trader_fraud

 

[TaftFan]

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.

 

[r3volution 3.0]

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.

 

[r3volution 3.0]

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.

 

[r3volution 3.0]

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.

 

[TaftFan]

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.

 

[r3volution 3.0]

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.

 

[Ronin Truth]

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

 

[erowe1]

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?