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Another Magnificent Moment in the World of Government Stimulus

George257 Wrote: May 21, 2012 6:53 AM
Good points, Tacitus. One disadvantage, though: you don't really notice that you are paying a sales tax or VAT. You just get used to everything being more expensive. I would therefore ideally combine the VAT with an income tax of say 5% or even 3% for everyone - even those on welfare.
johnm h Wrote: May 21, 2012 11:17 AM
Perhaps you can tell me who it favors, how it differs from a sales tax in its impact and why it worked so well in New Zealand where it was part of market reforms that freed the market throughout the economy with miraculous results. Also how does it keep people poor? What it does is restrain politicians, their cronies and others who live off public pork when tied to income taxes or as a replacement for all or part of income taxes. (Which is the tax that keeps people from becoming wealthier) I’m afraid you have very strong ideas that aren’t justified by your knowledge about taxation, but correct my perception by answering some of these questions.
John389 Wrote: May 21, 2012 9:56 AM
VAT is another way to keep the population poor and favors certain segments of business over others. It is an all-around terrible idea for the USA. I suggest you leave the USA and move to the EU if you are so in love with the concept. You can argue from there how exceptional life is while you collect governement handouts and jump up and down asking for others to pay when your State is broke.

A national sales tax however may have some merit. However, as a conservative, one should never agree to a NEW tax. No matter how small a percentage it is when enacted, it will undoubtably be raised "as needed".
johnm h Wrote: May 21, 2012 9:07 AM
No vat isn't hidden. You lived there and never looked at a receipt? The VAT works too well because it is a cash cow, so we can't have one unless we first cut spending and reduce income taxes. Where the VAT leads to cheating is where there are different rates on different products, an invitation for corruption. The Fair tax is a good idea, but only as a VAT and we must keep some income tax, preferably linked to the VAT at about 10% to assure accurate reporting. A sales tax isn't collected at the border so that minority retailers would drive trucks of imported goods through that loophole.
Hawker 1 Wrote: May 21, 2012 8:49 AM
O right VAT we can all see just how well the vat tax has worked for any Nation that has one.
VAT , is added at every level of maf. of any product and is hidden in the final price. I know I lived in Britian for 10 years working for an Oil Co.
As far as cheating on sales anyone who will cheat is going to find a way to cheat . The Fair Tax covers all , even the black market of say drugs. The drug dealers are going to spend their earnings , so we get some tax from them as of now we do not. That is just one example of hundreds of how the Fair Tax will work better than any form of tax.
johnm h Wrote: May 21, 2012 8:04 AM
It isn't hiddden. Travel to any country with a VAT, and all your receipts will show the IVA. Indeed you can get a rebate as a tourist for the amount of VAT you pay as it allows a border distribution. The main difference between a VAT and a Sales tax is that the sales tax is easy to cheat on, but a VAT isn't. The VAT also makes it more difficult for business to underreport their sales. A VAT would allow us to cut income taxes by half, sitmulate investment, and shrink the deficit, most importantly the current account deficit which is the one that really matters.
Chris from Kalifornia Wrote: May 21, 2012 7:23 AM
A sales tax and a VAT are two completely different things. A sales tax is added on to the price you see. A VAT is hidden in the price listed. Therefore you see the sales tax and you don't see the VAT. A VAT is insidious. A sales tax is blatant.
johnm h Wrote: May 21, 2012 7:22 AM
This is the approach New Zealand used. They cut the marginal income tax rates by half and imposed a 10% VAT, no exceptions, no variability in rates. The deficits melted away. Income tax receipts ballooned because it paid small business more to keep accurate records on their input costs than any savings they might gain fudging their income taxes. By the way VAT taxes are clearly shown on receipts wherever there are used. It is not hidden. Were we to link the VAT and the income tax at say 10% it would be even more difficult to increase them.

Most of my work on government stimulus focuses on economic theory and evidence.

But every so often it’s a good idea to remind ourselves of the ridiculous ways that government wastes money.

Here are some details from a boondoggle in West Virginia.

Nobody told Hurricane librarian Rebecca Elliot that the $22,600 Internet router in the branch library’s storage closet was powerful enough to serve an entire college campus. Nobody told Elliot how much the router cost or who paid for it. Workers just showed up and installed the device. They left behind no instructions, no user manual. The...

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