I'm a tax lawyer with 17 years of experience (includiong training IRS agents from Chicago, Baltimore and Philly).
"Ignorant" is something I am not when it comes to the Internal Revenue Code.
I see, that makes you an expert on VATs and Retail Sales Taxes some how? Seeing that neither in implemented under the current Internal Revenue Code.
Ignorance, as a measure of lack of knowlege, is as Ignorance does.
Oh, and by the way, if you implement the "fair tax" and somehow believe that Dems won't turn it into a VAT as soon as they regain controll of Congress
Ahhh! I really hate to be the one to inform you but for all practical purposes, our corporate tax is but one step from a VAT.
http://www.taxfoundation.org/foundationmessage03-00.html
"Under the WTO definition of the term, a sales tax is an indirect tax, as is an European-style VAT. The economic equivalence of an European-style VAT and a subtraction-method VAT is well-established. A subtraction-method VAT is essentially identical to a business income tax except that all purchases of plant and equipment may be expensed, rather than depreciated as under current U.S. law."
Issue: What Is the Best Way to Collect a Value Added Tax?
A value-added tax (VAT) generally is a tax imposed and collected on the value added at every stage in the production and distribution process of a good or service. Although a VAT may be computed in any of several ways, the amount of value added generally can be thought of as the difference between the value of sales and purchases of a business.
Several administrative systems could be used for a VAT: the credit-invoice method, the subtraction method, and the addition method. The credit-invoice method has been the system of choice in nearly all countries that have adopted a VAT. A subtraction-method VAT is also known as a business-transfer tax. The addition method is a mirror image of the subtraction method and will not be discussed here.
Credit-Invoice Method VAT. Under the credit-invoice method, a tax is imposed on the seller for all of its sales. The tax is calculated by applying the tax rate to the sales price of the good or service, and the amount of tax generally is disclosed on the sales invoice. A business credit is provided for all VAT taxpayers on all purchases of taxable goods and services (that is, on inputs) used in the seller's business. The ultimate nonbusiness consumer does not receive a credit for his or her purchases. The VAT credit for inputs prevents the imposition of multiple layers of tax on the total final purchase price. As a result, the net tax paid at a particular stage of production or distribution is based on the value added by that taxpayer at that stage of production or distribution. In theory, the total amount of tax paid with respect to a good or service from all levels of production and distribution should equal the sales price of the good or service to the ultimate consumer multiplied by the VAT rate.
To receive an input credit, a business purchaser generally is required to have an invoice from a seller containing the name of the purchaser and the amount of tax collected. At the end of a reporting period, a taxpayer may calculate its tax liability by subtracting the cumulative amount of tax stated on its purchase invoices from the cumulative amount of tax stated on its sales invoices.
Subtraction-Method VAT. Under the subtraction method, value added is measured as the difference between a business's taxable sales and its purchases of taxable goods and services from other businesses. At the end of the reporting period, a rate of tax is applied to this difference in order to determine the tax liability. The subtraction method is similar to the credit-invoice method in that both methods measure value added by comparing sales to purchases that have borne the tax.
The subtraction method differs from the credit-invoice method principally in that the tax rate is applied to a net amount of value added (sales less purchases) rather than to gross sales with credits for tax on gross purchases. A business's tax liability under the credit-invoice method relies on the business's sales records and purchase invoices, while the tax liability under the subtraction method may rely on records that the taxpayer maintains for income tax or financial accounting purposes.
Seems to me you have missed the boat, Congress Critters are busily figuring out how to change the current corporate income tax, (which as all the necessary infra-structure elements for a VAT in place) into a WTO style VAT right under your nose by pretending the essential modification is somehow different from a VAT.
Committee on Ways and Means, Subcommittee on Select Revenue Measures, 5-9-02 Testimony
OTOH, Of the 45 states in the United States, having retail sales taxes, not one has managed to convert their retail sales tax system into a VAT inspite of Democrat legislatures in place in many of them over the decades that states have used retail sales taxes.
What you have missed is that no retail sales tax has ever been "turned into" a VAT. The VAT is a modification of European turnover taxes levied on business to business sales by adding a credit feature to reduce the cascading effects of such taxes as products pass from business to business in the production and marketing chain. That the VAT was made a requirement of EU membership to facilitate trade through tax harmoniztion and removal European turnover taxes.
http://www.uq.edu.au/economics/johnquiggin/news/GST9806.html
| "The VAT was introduced in France in 1954, to replace a system which relied a highly distortionary turnover tax on sales to supplement a rather ineffectual income tax system. The problem with a turnover tax is the 'cascade' effect arising from the fact that goods are taxed every time they change hands. The effective rate of tax on a good therefore depends on the length of the marketing chain from producer to final consumer. At even modest rates, cascade taxes are highly distorting. The VAT solves this problem elegantly, by allowing firms to credit the tax already paid on their inputs against the tax imposed on their sales. The net tax payable is therefore a fixed proportion of value-added. ..." "Like the metric system, the VAT was adopted by other European countries, and the use of a VAT was made a condition of membership of the European Union. Once again, the English-speaking countries had less need to make the change, and were slower to do so. Their income tax systems were more effective, and their wholesale and retail sales taxes were less distorting than cascade taxes. ..." |
Interestingly enough, retail sales taxes are treated separately in the EU, as a separate from of taxation entirely from the VAT and is allowed as a parallel system of taxation over and above the VAT altogether as the VAT is more akin to a corporate income tax. than it is to a Retail Sales Tax.
| http://europa.eu.int/eur-lex/en/consleg/pdf/1967/en_1967L0227_do_001.pdf FIRST COUNCIL DIRECTIVE Having regard to the Treaty establishing the European Economic Community,and in particular Articles99 and 100 thereof; Having regard to the proposal from the Commission; Whereas the main objective of the Treaty is to establish,within the framework of an economic union,a common market within which there is healthy competition and whose characteristics are similar to those of a domestic market; Whereas the attainment of this objective presupposes the prior application in Member States of legislation concerning turnover taxes such as will not distort conditions of competition or hinder the free movement of goods and services within the common market; Whereas the legislation at present in force does not meet these requirements; Whereas it is therefore in the interest of the commom market to achieve such harmonisation of legislation concerning turnover taxes as will eliminate, as far as possible, factors which may distort conditions of competition, whether at national or Community level,and make it possible subsequently to achieve the aim of abolishing the imposition of tax on importation and the remission of tax on exportation in trade between Member States; Whereas, in the light of the studies made, it has become clear that such harmonisation must result in the abolition of cumulative multi-stage taxes and in the adoption by all Member States of a common system of value added tax; Whereas a system of value added tax achieves the highest degree of simplicity and of neutrality when the tax is levied in as general a manner as possible and when its scope covers all stages of production and distribution and the provision of services;whereas it is therefore in the interest of the common market and of Member States to adopt a common system which shall also apply to the retail trade; Whereas,however,the application of that tax to retail trade might in some Member States meet with practical and political difficulties; whereas,therefore,Member States should be permitted,subject to prior consultation,to apply the commom system only up to and including the wholesale trade stage,and to apply,as appropriate,a separate complementary tax at the retail trade stage,or at the preceding stage; Whereas it is necessary to proceed by stages,since the harmonisation of turnover taxes will lead in Member States to substantial alterations in tax structure and will have appreciable consequences in the budgetary,economic and social fields; *** SNIP *** |
I accept your apology.
You will have my apology the moment you demonstrate a knowledge of the difference between a single stage retail sales tax from a VAT.
Some how I do not expect an apology from you.
I've got some land off of the coast of Tennessee I'd love to sell you my naieve little friend.
Don't need any as I have some great beachfront property down in Southwestern Colorado I'll be happy to sell you. In them mean time I suggest you start learning about what VATs really are before you have one sitting on your back, whether put in place by Democrats or Republicans in power.
Background on the issues, and why government, bottomline, is headed where it is where the tax system is concerned:
The International Components of Tax Reform
by Ernest S. Christian
IPI Policy Report #166a
The choice is VAT, EU style, that does not repeal individual income/payroll taxes, in fact just layers over the current federal tax system,
ECONOMY; A New Money Machine for the U.S.;
Bruce Bartlett, for NCPA
or Nation Retail Sales Tax that replaces all federal income/payroll taxes, and does not lay U.S. taxes on manufacturers in the first place, pick your poison. I prefer the retail sales tax I can see, over the VAT that is implemented out of sight and out of accountability to the electorate.
H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
Touch a nerve there?
You'll never live to see the Fair Tax. But, I admire your enthusiasm about it.