[frdalesmith]

"Naturally, you will be mobbed and maligned by the Kool-Aid drinkers who live under the illusion that taxing items at 23+% (for starters) won't have a negative effect on purchases. And they also think it won't create a burgeoning black market."

Of course a 23% tax will have a negative effect on purchases. However, more income will have a positive effect on purchases. If prices do not fall beyond the embedded costs for corporate taxes and compliance costs, employees will bring home their current gross pay.

A black market already exists, one of income. Under the FairTax, a black market for income becomes unimportant. The black market for purchases would become important. However, the black market for purchases would be easier to police since there are fewer retailers than employers.


"They'd just as soon want you to forget that the "fair tax" notion has been run before and consistently discovered to be an abysmal failure. But they're willing to risk tanking the U.S. economy for a regressive tax scheme. What cretins..."

Chile currently has a consumption tax and its economy is very good. Argue all you what about the regressivity of the FairTax. But you'd be wasting your time because the FairTax is progressive. Regressive means that the tax rate decreases as the tax base increases. Under the FairTax, the tax rate for someone spending at the poverty level (let's assume $10,000) is 0% since the prebate returns all taxes paid. Someone spending $20,000 would only pay an effective rate of 11.5% ($2,300 divided by $20,000). Someone spending $30,000 would only pay an effective rate of 15.3% ($4,600 divided by $30,000). Someone spending $100,000 would pay an effective rate of 20.7% ($20,700 divided by $100,000). From this, it is obvious that the effective tax rate goes up as spending goes up. Therefore the tax cannot be regressive.

[Toddsterpatriot]

Chile currently has a consumption tax and its economy is very good.

Are you sure about that?

Chile

Click on each topic for more information :

TAXES - ACCOUNTING

 

Corporate tax

Tax rate for resident companies	The corporation income tax legislation provides 2 types of taxes. The First Category Tax is levied on income derived from commercial, industrial and agricultural activities, mining, fishing; investment and real estate. The tax rate is 17%. The Second Category Tax refers to incomes arising from wages, salaries, overtime payments, bonuses, fees, gratuities, profit sharing and any other form of remuneration. It is a progressive rate which highest rate is 40% applicable on monthly basis.
Tax rate on long-term capital gains	Capital gains are included in gross income subject to First Category tax with certain exceptions.
System governing groups of companies and dividends paid by subsidiaries to their parent companies	The amounts distributed or remitted to non-resident or non-domiciled shareholders are subject to a 35% additional tax with a credit of the current rate of the First Category Tax.
Tax rate on branches	Branches are subjected to a tax at the rate of 35%,

Income tax

Fiscal year

The fiscal year begins on January 1-st and ends on December 31 of the same year.

Income tax rate

The rate is progressive from 0% to 40%.
The rate depends on monthly units of levy (the value of a unit in CLP is revalued each month):

Lower than 13,5 units	0%
13,5-30 units	5%
30-50 units	10%
50-70 units	15%
70-90 units	25%
90-120 units	32%
120-150 units	37%
Beyond 150 units	40%

Tax deductions or other allowances

Tax credit of 10% and other fixed deductions are allowed.

 

VAT rates

Standard rates	19%
Reduced rates	Are exempted of VAT exports, certain financial services, insurance, news services, technical services, consultancy and transport.

 

Other important taxes

Name of tax	Rate
Municipal tax	0,25% to 0,50% (of assets)
Other taxes	Inheritance or gift tax, mining tax, property tax, sales tax on luxury goods, stamp duty

 

 

Accounting

Introduction
Chilean financial accounting is tax returns orientated.

General accounting principles
- stocks: they are calculated with the " First in - First out " method.
- fixed assets: buildings, shares and bonds bought by the company.
- capitalization interests : interests incurred on fixed assets (shares and bonds).
- depreciations : there are several calculating methods for depreciations.
- investments and long-term fundings.
- research and development costs : they must be registered and paid off over a period of more than 6 years.
- interests for bills relative to accounts receivable and payable.
- provisions for redundancy payment.
- long term contracts.
- extraordinary costs : they appear in the profit and loss account.

Obligations and publications
Companies have to produce their their annual financial statement to the shareholders.
The account books must be published in Spanish and use the Chilean currency as reference.

Certification and auditing
External audits are compulsory for companies with capital and foreign investors with repatriated profits.

Professionals and representative organizations
The main representative body is the association of the Chilean bookkeepers: "the Association of Accountant in Chile".

FITA-Chile