How about a "VAT" system?

[Nebuchadnezzar]

For those who don't know a VAT is a Value Added Tax that countries impose on foreign goods at a high percentage rate, usually around 20%. I think Great Britain has a VAT of 20% right now but I'm not sure. Also, the VAT is added to the price of a product before its put on the store shelves and the customer never sees the actual price.

Could this be a way to generate Tax Revenue and possibly bring jobs back from over seas to the United States as it could maybe be cheaper to make crap here?

Just a thought.

[Benton]

(06-04-2015, 12:29 AM)Nebuchadnezzar Wrote: For those who don't know a VAT is a Value Added Tax that countries impose on foreign goods at a high percentage rate, usually around 20%. I think Great Britain has a VAT of 20% right now but I'm not sure. Also, the VAT is added to the price of a product before its put on the store shelves and the customer never sees the actual price.

Could this be a way to generate Tax Revenue and possibly bring jobs back from over seas to the United States as it could maybe be cheaper to make crap here?

Just a thought.

First question, yes. Second question, I don't see how.

You're, I think, talking more about a tariff than a VAT. A VAT replaces sales tax by adding in a lot of middle men who decide who should pay the tax... the guy who makes it, the guy who buys it and wholesales it, the guy who buys and resells it or the consumer who uses it. A VAT wouldn't bring any jobs back, although tariffs and closing corporate loopholes would.

But then you'd have people complaining that corporations manufacturing overseas, sheltering money overseas and enjoying the security of being here are being abused. Or something.

[JustWinBaby]

With computers and automation killing a lot of jobs, I'm not sure the same assumptions/dynamics espousing the advantages of trade and specialization apply. There simply are too many people, globally, and not enough jobs.

If the US cares about its standard of living, it will do something about the redistribution of that living standard to places like India, China, etc.. There's quite simply not enough jobs and wealth to share. Theory would say as everyone becomes wealthier, you just have more goods being produced and traded...but that assumes there aren't limits on resources (but outside of energy, I'm not sure there is).

Problem is the exchange of benefits isn't balanced in timing. You ship jobs over to India or China, but it will take decades before their consumers are strong enough to be shipping jobs back here, and buying a lot of our goods. So free trade agreements need to manage that timing imbalance.

[StLucieBengal]

How will this bring back jobs?

It will kill the new homes market. Since it's a tax on new Items.

This is a scary tax because this could crush the economy when its raised too high which it will be by progressives.

Yes it forces everyone to pay... I believe staples are excluded or there is a rebate for what they think staples cost...

I think i could live with a VAT if there were 0 income taxes. It's the only way it would work without magnifying the current problems with the tax code.

In that scenario a VAT is much more realistic than an income tax. Replace all federal taxes with a VAT. That would encourage spending.

The politicians still need to cut.

[StLucieBengal]

Btw thanks for posting this thread... I think this is a very valid debate and I have often thought of making a thread on this matter.

[Belsnickel]

The problem with a VAT system is the same with any transaction based taxes, they are regressive in nature. People in the middle and upper-lower classes end up paying a higher percentage of their income in taxes than upper classes.

[JustWinBaby]

(06-04-2015, 07:55 AM)Belsnickel Wrote: The problem with a VAT system is the same with any transaction based taxes, they are regressive in nature. People in the middle and upper-lower classes end up paying a higher percentage of their income in taxes than upper classes.

But that's where the money is!  And it's not exactly transparent, which is why it's been so popular in Europe (now creeping above an average of 21%!).

I see a VAT as inevitable because we have structural spending issues that the current system simply can't fund.  But I oppose it currently until they get their fiscal house in order, because giving them more money is no incentive to spend what they already have more prudently.

Consider entitlement reform first, which would probably entail a bump in FICA and a reduction in benefits...and just watch how that goes over.  Social insurance SHOULD be self-funding, and if you want to make it progressive (and technically it's currently partially regressive), fine.  But there should be two pots of revenues funding two pots of spending - entitlement and discretionary...and never should the two mix.  At least then voters would have a better idea of what they're really voting for.

[Bilbo Saggins]

(06-04-2015, 07:55 AM)Belsnickel Wrote: The problem with a VAT system is the same with any transaction based taxes, they are regressive in nature. People in the middle and upper-lower classes end up paying a higher percentage of their income in taxes than upper classes.

Absolutely true about how sales tax works.  The OP was more talking about targeting the tax toward foreign goods though, which sounds like just a plain old tariff to me.  The idea of targeting taxes toward goods made with cheap labor sounds good to me.  No worker in any country should be exploited to the point that their company can choke out their competitors who pay decent wages.  Hell, you could use the extra tax dough for sweetheart loans to local manufacturers/small businesses.

[Belsnickel]

(06-04-2015, 04:34 PM)JustWinBaby Wrote: But that's where the money is!  And it's not exactly transparent, which is why it's been so popular in Europe (now creeping above an average of 21%!).

I see a VAT as inevitable because we have structural spending issues that the current system simply can't fund.  But I oppose it currently until they get their fiscal house in order, because giving them more money is no incentive to spend what they already have more prudently.

Consider entitlement reform first, which would probably entail a bump in FICA and a reduction in benefits...and just watch how that goes over.  Social insurance SHOULD be self-funding, and if you want to make it progressive (and technically it's currently partially regressive), fine.  But there should be two pots of revenues funding two pots of spending - entitlement and discretionary...and never should the two mix.  At least then voters would have a better idea of what they're really voting for.

I'm completely for this last part. We need to allow Social Security to invest in other places because owing money to ourselves is fallacious. Even if we do send some interest from the general fund to SS, that is fine by me, but nothing other than interest payments from the general fund should be going to it. Nothing. It doesn't need to be progressive necessarily, but the rates need to be upped. I hate when we create something in government and say it will be separate from the general fund and then we take from it for something, which results in us having to put more money back into the program. We see it at every level of government.

[Benton]

(06-04-2015, 04:34 PM)JustWinBaby Wrote: But that's where [half] the money is!  

Yup.

[Beaker]

I don't know about a VAT, but I think the US should impose equal tariffs. For example, if China charges us a 25% tariff on exports to China, then we should impose a 25% tariff on incoming Chinese goods. We have let other countries get away with charging us higher tariffs than we charge them for far too long.

[JustWinBaby]

(06-05-2015, 10:11 AM)Beaker Wrote: I don't know about a VAT, but I think the US should impose equal tariffs. For example, if China charges us a 25% tariff on exports to China, then we should impose a 25% tariff on incoming Chinese goods. We have let other countries get away with charging us higher tariffs than we charge them for far too long.

Yeah, but millions of Americans would be pretty upset over paying almost $200 more for their Iphone.

[Beaker]

(06-05-2015, 03:29 PM)JustWinBaby Wrote: Yeah, but millions of Americans would be pretty upset over paying almost $200 more for their Iphone.

Cell phones will be the death of society.

[Benton]

(06-05-2015, 03:29 PM)JustWinBaby Wrote: Yeah, but millions of Americans would be pretty upset over paying almost $200 more for their Iphone.

oh no, then apple might have to make them here.

[Nebuchadnezzar]

(06-06-2015, 02:14 AM)Benton Wrote: oh no, then apple might have to make them here.

Exactly and if they don't then maybe another company will making their product cheaper here and forcing Apple to do the same.

[JustWinBaby]

(06-06-2015, 02:14 AM)Benton Wrote: oh no, then apple might have to make them here.

And that refutes my point about people bitching about paying $200 more for an Iphone how?

[JustWinBaby]

(06-06-2015, 04:25 AM)Nebuchadnezzar Wrote: Exactly and if they don't then maybe another company will making their product cheaper here and forcing Apple to do the same.

LMFAO....no, just no.