In a recent Wall Street Journal/NBC News poll, Americans were asked which economic issue facing the country concerned them most. Respondents chose deficit reduction over health care by a ratio of 2 to 1.
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We all know the recent and bitter history of tax struggles in Washington, let alone Mr. Obama's pledge to exempt those earning less than $250,000 from higher income taxes. This suggests that, possibly next year, Congress will seriously consider a value-added tax (VAT).
It will prove difficult to close the gap entirely via modifications to existing taxes and spending programs. A new revenue source, such as a value added tax (VAT), may be needed. A VAT imposed at a rate between 15 and 20 percent would essentially close the fiscal gap under the administration's budget.
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Get ready for it boys, Al Franken is #60 and this one is coming down the pike. Obama, through Orszag has set the stage for this.
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Health care must be "deficit neutral," Orszag told reporters. Rising costs for health care are the "core driver" of the government?s deficits, he said.
This would be in addition to current state sales taxes?
This would work as it does in Europe. A federal sales tax added on to every item of transaction. Now we pay a sales tax on the total of the goods we buy at a store, not so with a VAT; you'd pay the 15-20% on each item. I'm sure states would try and get their paws in on it too and have you paying tax on the total as well
Upon seeing the Overwhelming supply of dumb posts and retarded comments spreading. i have decided to apply the neg button in liberal amounts. you will not be negged for a genuine post which seeks debate. But you will be negged for posts which do not contribute in any way to the pursuit of knowledge. So if you are negged by me, know it is because i think you are genuinely stupid, its nothing personal.
This would work as it does in Europe. A federal sales tax added on to every item of transaction. Now we pay a sales tax on the total of the goods we buy at a store, not so with a VAT; you'd pay the 15-20% on each item. I'm sure states would try and get their paws in on it too and have you paying tax on the total as well
yah, its actually how sales taxes work in most countries. it stands for value added tax, and its a tax (15-20%) at value added at each stage of production. so let's say a farmer sells wheat to a flour mill to a baker to you. VAT is tacked on to the wheat in the first sell; then on the VALUE of the flour processing; then on the VALUE of the baking when its sold to you.
not sure how it would combine with state sales tax.
advantages of VAT:
1) Coverage
If the tax is carried through the retail level, it offers all the economic advantages of a tax that includes the entire retail price within its scope, at the same time the direct payment of the tax is spread out and over a large number of firms instead of being concentrated on particular groups, such as wholesalers or retailers.
If retailers do evade, tax will be lost only on their margins because customers that are registered firms gain nothing if their suppliers fail to collect tax, except delay in payment; they will pay more to the government themselves. Under other forms of sales tax, both seller and customer gain by evading tax. One particular advantage is that of the widening of the tax base by bringing all transactions into the tax net. Specifically, VAT gives the new government the opportunity to bring back into the tax system all those persons and entities who were given tax exemptions in one form or another by the previous regime.
2) Revenue security
VAT represents an important instrument against tax evasion and is superior to a business tax or a sales tax from the point of view of revenue security for three reasons.
In the first place, under VAT it is only buyers at the final stage who have an interest in undervaluing their purchases, since the deduction system ensures that buyers at earlier stages will be refunded the taxes on their purchases. Therefore, tax losses due to undervaluation should be limited to the value added at the last stage. Under a retail sales tax, on the other hand, retailer and consumer have a mutual interest in underdeclaring the actual purchase price.
Secondly, under VAT, if payment of tax is successfully avoided at one stage nothing will be lost if it is picked up at a later stage; and even if it is not picked up subsequently, the government will at least have collected the VAT paid at stages previous to that at which the tax was avoided; while if evasion takes place at the final stage the state will lose only the tax on the value added at that point.
If evasion takes place under a sales tax, on the other hand, all the taxes due on the product are lost to the government.
A significant advantage of the value added form in any country is the cross-audit feature. Tax charged by one firm is reported as a deduction by the firms buying from it. Only on the final sale to the consumer is there no possibility of cross audit.
Cross audit is possible with any form of sales tax, but the tax-credit feature emphasises and simplifies it and is likely to make firms more careful not to evade because they know of the possibility of cross check.
3) Selectivity
VAT may be selectively applied to specific goods or business entities. We have already addressed essential goods and small business. In addition the VAT does not burden capital goods because the consumption-type VAT provides a full credit for the tax included in purchases of capital goods. The credit does not subsidize the purchase of capital goods; it simply eliminates the tax that has been imposed on them.
4) Co-ordination of VAT with direct taxation
Most taxpayers cheat on their sales not to evade VAT but to evade personal and corporate income taxes. The operation of a VAT resembles that of the income tax more than that of other taxes, and an effective VAT greatly aids income tax administration and revenue collection. It is interesting to note that when Trinidad and Tobago set out to introduce VAT it chose one of its top income tax administrators as the VAT Commissioner.
It must be stressed once again that if properly implemented VAT can ultimately lead to a reduction in overall rates of tax.
Revenues will not be sacrificed but would in fact be enhanced as a consequence of the broadened tax base. This does not seem to be a bad idea at all.
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yah, its actually how sales taxes work in most countries. it stands for value added tax, and its a tax (15-20%) at value added at each stage of production. so let's say a farmer sells wheat to a flour mill to a baker to you. VAT is tacked on to the wheat in the first sell; then on the VALUE of the flour processing; then on the VALUE of the baking when its sold to you.
not sure how it would combine with state sales tax.
advantages of VAT:
1) Coverage
If the tax is carried through the retail level, it offers all the economic advantages of a tax that includes the entire retail price within its scope, at the same time the direct payment of the tax is spread out and over a large number of firms instead of being concentrated on particular groups, such as wholesalers or retailers.
If retailers do evade, tax will be lost only on their margins because customers that are registered firms gain nothing if their suppliers fail to collect tax, except delay in payment; they will pay more to the government themselves. Under other forms of sales tax, both seller and customer gain by evading tax. One particular advantage is that of the widening of the tax base by bringing all transactions into the tax net. Specifically, VAT gives the new government the opportunity to bring back into the tax system all those persons and entities who were given tax exemptions in one form or another by the previous regime.
2) Revenue security
VAT represents an important instrument against tax evasion and is superior to a business tax or a sales tax from the point of view of revenue security for three reasons.
In the first place, under VAT it is only buyers at the final stage who have an interest in undervaluing their purchases, since the deduction system ensures that buyers at earlier stages will be refunded the taxes on their purchases. Therefore, tax losses due to undervaluation should be limited to the value added at the last stage. Under a retail sales tax, on the other hand, retailer and consumer have a mutual interest in underdeclaring the actual purchase price.
Secondly, under VAT, if payment of tax is successfully avoided at one stage nothing will be lost if it is picked up at a later stage; and even if it is not picked up subsequently, the government will at least have collected the VAT paid at stages previous to that at which the tax was avoided; while if evasion takes place at the final stage the state will lose only the tax on the value added at that point.
If evasion takes place under a sales tax, on the other hand, all the taxes due on the product are lost to the government.
A significant advantage of the value added form in any country is the cross-audit feature. Tax charged by one firm is reported as a deduction by the firms buying from it. Only on the final sale to the consumer is there no possibility of cross audit.
Cross audit is possible with any form of sales tax, but the tax-credit feature emphasises and simplifies it and is likely to make firms more careful not to evade because they know of the possibility of cross check.
3) Selectivity
VAT may be selectively applied to specific goods or business entities. We have already addressed essential goods and small business. In addition the VAT does not burden capital goods because the consumption-type VAT provides a full credit for the tax included in purchases of capital goods. The credit does not subsidize the purchase of capital goods; it simply eliminates the tax that has been imposed on them.
4) Co-ordination of VAT with direct taxation
Most taxpayers cheat on their sales not to evade VAT but to evade personal and corporate income taxes. The operation of a VAT resembles that of the income tax more than that of other taxes, and an effective VAT greatly aids income tax administration and revenue collection. It is interesting to note that when Trinidad and Tobago set out to introduce VAT it chose one of its top income tax administrators as the VAT Commissioner.
It must be stressed once again that if properly implemented VAT can ultimately lead to a reduction in overall rates of tax.
Revenues will not be sacrificed but would in fact be enhanced as a consequence of the broadened tax base. This does not seem to be a bad idea at all.
Except that only makes sense if it's a Fair Tax, instead of income tax.
When you combine the two to pay for the Dear Leaders Wise And Farsighted 4 Year Plan, you end up with a european (EUROPE! GOOD!) system where they take 60%+ of every penny you make in some form of tax.
Europeans still managed to bankrupt themselves even with that much taxation.
dear voters of the US, I moved to your lovely country to get away from the insane tax-spend retardedness of Europe. Why on earth did so many of you think adopting their model is a good idea and elect a douchebag who promised to turn the US into Europe jnr?
dear voters of the US, I moved to your lovely country to get away from the insane tax-spend retardedness of Europe. Why on earth did so many of you think adopting their model is a good idea and elect a douchebag who promised to turn the US into Europe jnr?
If you moved to the US after Reagan, you're just an idiot. That's when deficit spending took off crazy fast and we aren't looking back.
When you combine the two to pay for the Dear Leaders Wise And Farsighted 4 Year Plan, you end up with a european (EUROPE! GOOD!) system where they take 60%+ of every penny you make in some form of tax.
Europeans still managed to bankrupt themselves even with that much taxation.
don't lump all of europe into one big, cohesive area. there are vast differences between individual countries.
it's in norwegian, but the numbers are from oecd economic outlook, june 24th 2009. the numbers are budget surplus or deficit as percentages of overall gdp. i think the numbers speak for themselves.
a few translations:
tyskland = germany
storbritannia = great britain
frankrike = france
eurolandene = the rest of the european union
sverige = sweden
Last edited by kel_varnsen; 07-01-2009 at 04:18 AM.
don't lump all of europe into one big, cohesive area. there are vast differences between individual countries.
it's in norwegian, but the numbers are from oecd economic outlook, june 24th 2009. the numbers are budget surplus or deficit as percentages of overall gdp. i think the numbers speak for themselves.
a few translations:
tyskland = germany
storbritannia = great britain
frankrike = france
eurolandene = the rest of the european union
sverige = sweden
I would be more interested to see the deomgraphic breakdowns of each of those nations included........................wonder if there would be trends?
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don't lump all of europe into one big, cohesive area. there are vast differences between individual countries.
it's in norwegian, but the numbers are from oecd economic outlook, june 24th 2009. the numbers are budget surplus or deficit as percentages of overall gdp. i think the numbers speak for themselves.
a few translations:
tyskland = germany
storbritannia = great britain
frankrike = france
eurolandene = the rest of the european union
sverige = sweden
So one nation out of all of the countries that has a VAT means it would be a success if tried here?
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I would be more interested to see the deomgraphic breakdowns of each of those nations included........................wonder if there would be trends?
i bet you there are a lot of japanese in japan, norwegians in norway, and germans in germany.
its a misleading chart anyway. the tax system isn't the sole determinant indicator of national fiscal health. china also uses the VAT, why don't you look at their system to see if its a model for ours? quite simply because there are other factors at play, not just the use or disuse of the VAT. you guys are getting way off track.
a VAT is more efficient in collection and less likely to be cheated on vs. a retail sales tax. its also spread out over the entire chain of production/sales. but what are the disadvantages?
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So one nation out of all of the countries that has a VAT means it would be a success if tried here?
uhm what? i was just replying to poster who claimed that:
"Europeans still managed to bankrupt themselves even with that much taxation."
i guess i should have stated my point explicitly. here it is:
level of taxation varies in europe. including VAT. furthermore, the overall economic situation within europe varies a lot as well. as a result of a number of different issues such as taxation, social stability, education, infrastructure, natural resources etc.
there is a lot of variation within europe; to make any general, sweeping claims about the entire continent is often inaccurate at best and dead wrong at worst.
ps.
the nordic countries do prove that a high level of taxation does not prevent economic growth and budget surpluses...
uhm what? i was just replying to poster who claimed that:
"Europeans still managed to bankrupt themselves even with that much taxation."
All you've shown is that Norway is not in debt which has relatively little to do with their use of a VAT, but of their overal budgeting.
You really haven't disproven anybody's statements, only given further credence to them by posting a chart showing the overall indebtedness of Europe. Smooth move Ex Lax.
__________________
My Goals:
For to make the heavy weights light and the baggy clothes tight.
Last edited by Morbid_Mind; 07-01-2009 at 12:37 PM.
An idiot for wanting to live somewhere where the cost of living is HALF that of europe and I can save at least 20k a year in my salary bracket in taxes? Got me there cheif... what was I thinking.
pro-progressives can post charts all they want, but the real cost of living in europe is a government that steals your paycheck at every corner.
I live in CA (which americans bitch about being a tax sink) and even here it's nothing like as relatively expensive as living in some small ****ty, grey city in the UK where gas is $8 a gallon and meat is a once a week luxury.
But yeah, if that's what people wanted the US to be like then bring on the VAT
no, that's not what i have shown. at all. these are just yearly (projected) budget surpluses and defecits. it says nothing about the existing debt.
Excuse my miswording. But all you have shown is that the one country that has a budget surplus, the rest of which, are in debt (deficit).
Hardly disproving anyone from saying that Europe has put themeselves into debt even with their high taxation. I think that if you had evidence to the contrary perhaps you would have posted it instead of some obscure Norweigan chart showing budget surpluses/deficits.
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furthermore, it also proves that the situation within europe is varied, so to speak of europe as one cohesive unit is wrong.
So then I suppose the info in your chart for the EU is invalid then?
__________________
My Goals:
For to make the heavy weights light and the baggy clothes tight.
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