Key word — vat tax.
http://www.freerepublic.com/tag/vattax/index?tab=articles
Ted Cruz’s and Rand Paul’s Strange Embrace of the VAT
Law of Unintended Consequences: New EU Tax Laws Force Thousands of Businesses to Close
Bill Clinton: More immigrants and value-added tax will reduce deficit
Investor’s Business Daily : About the VAT Tax, Robert Reich Is Right
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Adding to the key word:
The VAT in Ted Cruz’s Tax Plan is a Threat to Limited Government and the Economy [January]
http://www.freerepublic.com/focus/news/3384004/posts
‘Cruz’s VAT and European VATs are economically identical, and his entails the same substantial threat of growing government.’
The VAT: Coming Soon To A Campaign Stop Near You (Cruz Tax Plan)
http://www.freerepublic.com/focus/f-news/3394643/posts
American Enterprise Institute | February 8 | Alan D. Viard
‘Moreover, their proposed VATs would be largely invisible to the public because they would not be listed on customer receipts or pay stubs ...’
Hidden taxes are the worst.
Sorry - lovely thesis but utterly wrong. Each layer of VAT is offset by the all previous layers.
How does a 16% business tax that eliminates corporate and payroll taxes raise the price of products? It should actually lower them.
In addition to the low 16% flat tax on business, the business can also deduct 100% of their costs for improving their business in one year.
VATs act as an ersatz tariff on imports. Germany, for example, has a VAT that tacks on 19% to the cost of all imports. This raises the price on all imports and favors the purchase of domestic goods.
Cruz plan for corporate tax is a form of VAT, but there is no collection at each step. From Tax Foundation:
Enacts a broad-based, 16 percent “Business Transfer Tax” or value-added tax. This tax is levied on all business profits, less capital investment. This would include the payroll of business, government, and non-profit institutions, as well as net imports. The tax would exempt from taxation the purchase of health insurance. A business transfer tax is also often known as a subtraction-method value-added tax. While its base is identical in economic terms to that of the credit-invoice VAT seen in many OECD countries, it is calculated from corporate accounts, not on individual transactions.
http://taxfoundation.org/article/details-and-analysis-senator-ted-cruz-s-tax-plan
A VAT usually taxes imports and usually subtracts the tax on exported goods.
Cruz’s plan is not a VAT tax, however, it is an unconstitutional tax as it would continue to misapply the law just as the current income “excise” tax is misapplied. Also, $36,000 for a family of four is NOT middle class in today’s economy.
The fact is, the numbers in Ted’s tax plan do not add up, and not to be biased about the subject, as a Trump supporter, I can honestly tell you that Trump’s flat tax plan is not any better. The problem is downsizing government, educating the public as to the true nature of what and “excise” tax is and does that “excise” refer to “all that one deposits in their bank account”. Therein lay the problem of the bloated government beast, the misapplication of a 100% constitutional Article 1 “excise” tax.
Look at Great Britain if you want to see how pernicious a VAT is
bfl
You pay the VAT when you buy something, but when you sell it either domestically or export it, the VAT is refunded.
Sometimes in VAT countries, there is a small amount of the tax not refunded for administration.
The problem with VAT is the huge expense of administering the system that weights on businesses.
Remember, it is a refund, so you can’t get more than you paid.
VAT = Value Added Tax but I call it productivity tax - Businesses that create the most value as compared to their expenses that were subjected to the VAT will pay the highest share of all taxes. VAT is truly is an innovation tax.
Just think what this tax would do to a Software Company, nearly all their expenses will no longer be tax deductible and everything they sold would qualify for almost no refund because they make software.
This explains why the United States has such an advantage in these soft information industries, VAT kills these types of businesses.
The tax foundation report is good.
I have tried to figure out that Trump is referring to when he says he’s going to enact a big tax on imports from Mexico the way they do on out exports to Mexico. The only way I make sense out of this is that he, too, is for a VAT.
Since the US is maybe the only major player in international trade that doesn’t have a VAT, we’re hit pretty bad. To simply the pictures, let’s say we exporting agricultural product to Mexico that is 100 percent made in America. Therefore, the entire amount is subject to Mexico’s VAT, while their products come into this country free of VAT.
By enacting a VAT of about the same size as the other countries of the world, we get free trade that is fair trade.
Furthermore, most goods are complex in terms of their origin. A Ford car made in Mexico might have 40 percent content from China, 20 percent content from the US, 20 percent content from other countries, and be only 20 percent made in Mexico in terms of content. All the content coming into Mexico gets hit with the VAT and those payments are off-sets or deductible from the VAT on the export of the car to the US.
Similarly, American timber sent to Japan pays the VAT, and then the Japanese company that turns it into chopsticks deducts that VAT from the VAT on the chopsticks.
Everything seems to come together, except the following: what about the impact of a VAT on the cost of living? The really big question is whether the VAT will be an ADDED tax or a SUBSTITUTE tax? The Democrats salivate over having a VAT on top of all the taxes we currently pay.
In the Cruz and Rand Paul plans, the VAT and new income tax substitute for the Social Security tax (employee and employer), current personal and corporate income tax, capital gains tax and inheritance tax.
As a concept this looks very attractive. Very fair. Very efficient (in terms of how much paperwork is required). Very high level of compliance. Real financial privacy. Big increase in the incentives to work and to hire, and to save and to invest. But, we should make sure that this concept is thoroughly investigated to make sure to works out to everybody’s credit.
Isn’t the vat just another progressive tax? What happened to the fair tax?
From your example:
Taxes = screw-ed
NO VAT! We are taxed enough already. No more taxes none! Zero! Na-Da!!
snip-—
Most significantly, the TPP does not address a massive cost to U.S. goods and services that has a chokehold on our export levels: foreign Value-Added Tax (VAT) schemes.
As usual the ‘devil’ is in the details.