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Discussion Starter · #1 ·
Value Added Tax

I've seen snippets about this new way to fleece the populace but this article explains it in layman's terms.

America: Prepare For An Avalanche Of Taxes | Editorial

Here is an excerpt:

Without any tax:
A widget manufacturer spends $1.00 on raw materials and uses them to make a widget.
The widget is sold wholesale to a widget retailer for $1.20, making a gross margin of $0.20.
The widget retailer then sells the widget to a widget consumer for $1.50, making a gross margin of $0.30.
With a North American (Canadian provincial and U.S. state) sales tax:
With a 10% sales tax:
The manufacturer pays $1.00 for the raw materials, certifying it is not a final consumer.
The manufacturer charges the retailer $1.20, checking that the retailer is not a consumer, leaving the same gross margin of $0.20.
The retailer charges the consumer $1.65 ($1.50 + $1.50x10%) and pays the government $0.15, leaving the gross margin of $0.30.

With a value added tax:
With a 10% VAT:
The manufacturer pays $1.10 ($1 + $1x10%) for the raw materials, and the seller of the raw materials pays the government $0.10.
The manufacturer charges the retailer $1.32 ($1.20 + $1.20x10%) and pays the government $0.02 ($0.12 minus $0.10), leaving the same gross margin of $0.20.
The retailer charges the consumer $1.65 ($1.50 + $1.50x10%) and pays the government $0.03 ($0.15 minus $0.12), leaving the gross margin of $0.30 (1.65-1.32-.03).

OK - Complicated enough for you? The bottom line is this: There will be a humongous increase in the price of everything you purchase, which is covered by a VAT tax. It ain't gonna be pretty.
Charles Krauthammer has authored a piece entitled: "The 'value added tax' is coming to America" In his article Krauthammer says: "People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude - if you exempt food the yield would be more like $900 billion).
 

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The Skeptic
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the government gets the same amount as with just the 10% tax, and consumers are charged the same amount as with just the 10% tax, I don't see how that jacks the price up :dunno:
 

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Beginner's Mind
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This can't happen. Our Glorious Leader has stated several times that there will be no new taxes for those earning less than $250K.
 

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Discussion Starter · #4 ·
This can't happen. Our Glorious Leader has stated several times that there will be no new taxes for those earning less than $250K.
Yeah. :rolleyes: Why did my tires go from $85 to $120 each? That would be last years 30% excise tax. And I sure don't make over $250,000
Thank you Mr. Government man.
 

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The Skeptic
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i dunno, after doing some searching I found the original op-ed piece by Krauthammer, and his reasoning, along with Longstreet's, is that because it happened in Europe, and Europe is a socialist continent (false), that it's going to happen here because we are a socialist nation now

Yes, America is now a socialist state very much like the old Soviet Russia was and the modern European states are today. Pity.
maybe i'm biased against it because of the improper use of "begs the question"

"Begging the question (or petitio principii, 'assuming the initial point') is a logical fallacy in which the proposition to be proved is assumed"
 

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I invented the internet. :rofl:
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The idea behind the VAT is that it's easier to sell than a sales tax. A sales tax is obvious to anyone who purchases anything that's taxable. A VAT is like social security taxes of which the employee is only paying half of the tax and since it comes out of their check before they get it it's easier to ignore. With the VAT the consumer isn't seeing anything extra being added to the price of what they're buying. The tax is paid by "other people" prior to it hitting the shelves. It's like a renter not being conscious of the fact that they are paying property taxes because they don't have to pay those taxes directly. They are paid by the owner who simply adds the property taxes to the rent payments so that he can still make a profit.

Each increment is added in the stages prior to retail sales so it isn't obvious on the price you pay at the store.

In addition this is a federal tax so you would still be paying the sales tax in your state (if it has sales tax, Montana doesn't). Also. what do they do with garden or agricultural seed? Add the value of the produce that is grown? Remember, the tax is paid at the time of purchase. The price of seed would skyrocket. (Don't limit this to just seed. It will affect everything you purchase.) Even if you saved your own seed you'd still be liable for the tax on the seed you use. The ramifications are enormous and the loser is the consumer.
 

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The Skeptic
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ahh I see, that example is funky, if they meant to show that it is a negative they should have exampled it in a way that expresses that more fully

sure I'm against a VAT tax, but we don't have sales taxes here, would we be affected in the same manner or worse?
 

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I invented the internet. :rofl:
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ahh I see, that example is funky, if they meant to show that it is a negative they should have exampled it in a way that expresses that more fully

sure I'm against a VAT tax, but we don't have sales taxes here, would we be affected in the same manner or worse?
If it's a federal tax you will be affected. It just won't be listed it in the price you pay at the store.

Some employers print out what they pay in matching social security taxes when they issue their employee's checks. If a VAT in passed I sincerely hope that every item bought comes with the amount of VAT paid in the "chain of progression" clearly listed.

The Government likes things like sales tax, income tax, VAT, social security, unemployment taxes, etc. because it makes collection easier. Business owners have too much to lose to not pay the tax and instead of chasing down milions of private citizens to collect their taxes they only have to concern themselves with business owners. Plus many of these taxes are ignored by the people. Can you imagine the outcry if people were paid their gross wages and then had to send a personal check to the IRS for the full amount of social security, unemplyment, income taxes, etc.? Some people have extra taken out because they won't "miss it" and can look forward to a nice "refund" in the spring.
 

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How do we get back to being a constitutional republic? :confused:
i dunno, after doing some searching I found the original op-ed piece by Krauthammer, and his reasoning, along with Longstreet's, is that because it happened in Europe, and Europe is a socialist continent (false), that it's going to happen here because we are a socialist nation now

maybe i'm biased against it because of the improper use of "begs the question"

"Begging the question (or petitio principii, 'assuming the initial point') is a logical fallacy in which the proposition to be proved is assumed"
 

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sure I'm against a VAT tax, but we don't have sales taxes here, would we be affected in the same manner or worse?
Kogneto, your post is accurate to a point. Yes, you do not have a city or state sales tax. But after 31 years in Alaska, 20 of them being in Anchorage, I can say the lack of a sales tax does not save you ANYTHING. Your property taxes in Anchorage are one of the highest in our nation. For instance, the house I own now here in Colorado has yearly property taxes of $1200. The similar size house I owned in Anchorage, last year had annual property taxes of over $4000. I checked, I know, its available on the internet.
The Municipality of Anchorage, a borough, still has to pay for supplies, buildings, the host of things that they must purchase to function. As a VAT tax is placed on the manufacturing, shipping, stocking (cuz it ain't all made there in Alaska), the cost of procuring those things WILL go up, and eventually so will the mill rate and therefore your property taxes. Because they pay for EVERYTHING.
 

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You guys are getting off cheap.... the property tax on a 3 bedroom 2 bath house in Key West, Fla is over $14,000.
 

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I was surprised that Texas has no state income tax, BUT, the Lady of the Manor, one day asked me to drive her around to do stuff, so i did, we went to a building by the local high school, I asked why, to pay the school tax was the reply !!! I was shocked, and asked how much...$600.00 a year she replied!!!! Holy Bat Chit Bat Man !! I asked her if she had to pay property taxs on the old homestead, oh hell yes she said!... and this is a family that home schools!!!... 600.00 a year over the property taxs for schools!...with no kid in the system...

Is this common?... MT has both income tax and property tax but the school gets their money from the state budget from those taxs... I could not believe this!!!

MT has no sales tax, and can't unless "The People" vote for it...every year the politicians call for a sales tax but are unwilling to stop one of the other tax's...they do offer to "REDUCE" property tax's as if the people don't realize the difference between a reduced tax and "NO" tax... you can bet your bippy that within two years the reduced tax would be back equal to or higher then it was... they really do think we are stupid...

I believe if every person and every business, corporation, and yes even church paid a flat 10 % tax from income "With NO deductions Allowed" they would have plenty of money to handle those things the Federal Government are required to do ...Under the Constitution... that would end the IRS empire, wouldn't need but a few people to make sure the business sector was playing fair..the workers would lose 10% of every check but would not have to file at the end of the year .. done.. and if the Fed can't live on that then start cutting some pork! like every couple of years they just have to have the latest Star Wars Jet fighter, why?... do we need 13 Air Craft Carriers? really?... maybe, I don't know...Hell build 500 missile firing Destroyers in place of 5 nuke subs...for less money... anyway, there are many places to cut pork.. they just need to stop working to get reelected and work for the good of the people...which ain't bringing home the pork..

It's called living within your means, if you have 100 bucks, that's all you get to spend...

Yes I know, I'm a simple person, and logic isn't allowed when dealing with the gov...so...
 
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