I absolutely agree...the VAT tax is a nightmare. It means that each stage in the production process is taxed according to the “value added” by that stage. Friedman pointed out that something as simple as a loaf of bread has 67 steps. Can you imagine the bureaucracy that would be needed to track that in the US!? However, if that loaf of bread is produced in England but sold to a US customer, the 67 taxes increments still apply, but they don’t add another VAT to the export price.
True, most countries impose some kind of import tax on our goods. The sad thing is that the gov’t gets the funds...both sides of the actual transaction get nothing. Given that the gov’t did nothing to produce the good or the income to buy it, why should they get a windfall that ends up being passed onto both the producer and consumer (assuming the demand is not perfectly inelastic)?
Get rid of tariffs and quotas, get the gov’t out of international trade, and let comparative advantage do its thing. We’ll all be better off.
I’m glad we agree that the VAT is a bureaucratic nightmare, enriching everyone but the poor suffering taxpayer!
HST, VAT is border adjustable: items exported FRom VAT countries have the VAT rebated to them at their border. Essentially, goods FRom VAT countries are untaxed as they leave, thus lowering their retail price.
Advantage: VAT country’s goods exported to non-VAT countries; i.e., USA takes it in the shorts because, except for a small percentage business income tax levied on the US sales company, there is no US tax levied.
FairTax levels the playing field domestically and abroad: the FairTax is imposed in the USA on both domestic and imported goods (at the same rate) and, since the FAirTax is NOT imposed on US exports, VAT on US goods and VAT on their domestic goods balances everything out overseas.
IOW, the tax burden is shared equally and fairly in the USA and abroad.
That, my FRiend is but one of the reasons I like the FairTax. I have already mentioned the FReedom engendered by the FAirTax,
Your point re: tariffs and quotas is well made. I agree.
Picture this: competition between countries based on price and quality of product vice tariffs and quotas picking winners and losers. Countries with VATS would compete with the USA FairTax and vie with one another for competitive advantage, in time eliminating tariffs and quotas and forcing tax rates lower to the point that they would equal out. Stasis may not be the correct economics term, but I think you get the picture.
Thus, FAirTax, in the long run satisfies your concerns re: tariffs, quotas and the wrong people profiting FRom trade.
Please carefully consider incorporating the FairTax into your peer group discussions on the economy.