Posted on 10/07/2005 8:39:52 AM PDT by SolidSupplySide
Jharkhand, the latest state to announce its decision to switch to the State VAT, must be commended. Despite being a BJP-ruled state at a time when the BJP leadership is preventing its states from joining the Vat regime, Jharkhand has chosen to do the sensible thing. It indicates either a change in the stance of BJP’s leaders, or some creditable independence on the part of Jharkhand’s leaders. This leaves six major states out of the system — Rajasthan, Chhattisgarh, Madhya Pradesh, Gujarat, Tamil Nadu and UP. Talks have been taking place with political leaders to get them to join in.
By staying out of the State Vat regime, the BJP has a political point to make. But what is UP’s excuse? The arguments against the State Vat are, in any case, getting weaker by the day. The performance of state revenues in the first five months of 2005 — April to August — has been encouraging. Revenues have grown at 16 per cent — higher than the 12 per cent historical average. Some states like Karnataka, Punjab and Delhi, have witnessed even stronger revenue growth at 25 per cent. The resistance that was to be expected from the trader community, which now cannot evade taxes as easily as it could under the earlier system [of sales taxes], has been a token one. This is also because of many sensible changes made to the VAT rules which ensured that small traders did not get unnecessarily burdened under the new administration. The self-assessment system in the State VAT also reduced the scope for harassment of traders by sales tax officials. An information network, allowing states to cross-check payment information has been put to trial and is expected to improve compliance and reduce evasion further. The Central Sales Tax (CST), which has to go by 2007, will now be reduced from 4 per cent to 2 per cent in the next fiscal year. Moreover, the Centre has assured any state worried about revenue loss of compensation. With Jharkhand and Uttaranchal joining in, the case in favour of the VAT has been further strengthened. It is important that all states join the system, otherwise the unscrupulous could exploit the differences in the tax regime between states. This would be unfair to all honest tax payers.
Also, we need to remember that the State VAT is an intermediate step towards the proposed Goods and Services Tax, which is a value added tax on all goods and services produced in the country. When 130 countries, including India’s neighbours like Pakistan, Bangladesh, Sri Lanka and China, have implemented the VAT, making their manufacturing more competitive, we need to join up or get left behind.
Some perhaps. But everyone will take home more money.
The VAT is harder to evade. Less evasion mean you can generate the same revenue with a lower rate.Actually, the way I see it, the selling point of a VAT is that it can generate the same revenue as a sales tax with a lower rate. I don't see anything wrong with that picture. (#6)How could that be, mathematically?
Okay, you tell me. The income tax has disappeared along with the costs of compliance. Business save how much now? Let's see what we can expect from an anti.
What about FICA? You didn't address that.
Okay, you tell me. The income tax has disappeared along with the costs of compliance. Business save how much now? Let's see what we can expect from an anti.The FairTax base for 2004 would have been ~$9,716 billion. Add $1,173 billion in exports to that (the claim is taxes are embedded in them too) and you get $10,889 billion. This is the amount that is suppose to be reduced by the "embedded taxes." In 2004, corporate income taxes were $189.4 billion, add half of the employment and general retirement receipts ($344.6 billion) and you get a grand total of $534 billion in tax revenue from corporations. That is 4.9% of the FairTax base plus exports. Add an extremely generous $100 billion compliance cost and you get 5.8% of the FairTax base.
Yes, absolutely ... full of beans. Almost everything you claimed in your post #22 to be taxable for a church IS NOT!!! That's certainly more beans than anyone cares to count.
As with a business, if a church buys bibles at retail and usess its registration certificate to not pay the FairTax and then resells them, the end purchaser of the bible will be taxed. But to my knowledge, that is an exceedingly rare thing on the part of a church and it would be far more likely that they would ask their members for donations to pay for the bibles and give them away or that that a church-owned printing company would print them for distribution by the church.
In any event almost everything you and Looey claim to be taxable ... ISN'T. Some people call that lying - I'm merely saying you're full of beans.
And, no, that ISN'T exactly the way you said it wopuld be ... quite the oppposite in fact.
In fact, I think he did but he'll never admit it. It's probably not worth pursuing since he "misstates" so many things.
In any event almost everything you and Looey claim to be taxable ... ISN'T.Argh, you are obtuse.
In fact, I think he did but he'll never admit it. It's probably not worth pursuing since he "misstates" so many things.In fact, I didn't. But that won't stop you from lying about it.
Certainly not anything remotely like what is occurring now with the "progressive" income tax!
You're missing the whole point of a VAT. It's supposed to be invisible. If it all appeared on the receipt, it would basically BE 'The Fair Tax'.
All the Fair Tax is, is all the taxes we are currently paying now without knowing it, lumped together on the final receipt like a big kick to the nuts.
The psychological effects of this on government spending is the greatest value (among many) of a Retail Sales Tax.
We'll take the free speech and tax on consumption, thanks. The 501c3 laws subject us to IRS scrutiny and control anyway. There's no escape from them whether we apply for tax-exempt status or not.
You're missing the whole point of a VAT. It's supposed to be invisible. If it all appeared on the receipt, it would basically BE 'The Fair Tax'.Uh, no. The point is that it's difficult to evade. In most countries the VAT appears on the receipt just like a sales tax. Go to Amazon UK and add a product to your cart. When you check out it will list the "Total before VAT" and then the VAT, just like it would here with a sales tax.
There's plenty of room in the business (and not just corporate) income tax structure and especially including compliance costs for prices to decline once these embedded tax costs are removed. We'll eventually see that.
And a simple example of cascading tax costs shows why this is true:
======================================
level 1 2 3 4 5 6
init. cost sell price $2.01 $4.05 $8.15 $16.40 $33.01 $66.44
$1.00 cost $1.00 $2.01 $4.05 $8.15 $16.40 $33.01
tax rate profit before tax $1.01 $2.04 $4.10 $8.25 $16.61 $33.43
34.40% tax $0.35 $0.70 $1.41 $2.84 $5.71 $11.50
net profit $0.66 $1.34 $2.69 $5.41 $10.90 $21.93
net profit % 33.00% 33.00% 33.00% 33.00% 33.00% 33.00%
accumulated $0.35 $1.05 $2.46 $5.30 $11.01 $22.51
tax paid
tax cost as 17.31% 25.91% 30.18% 32.30% 33.36% 33.88%
% of sell price ====================================== Note that in this example the intention is to get a 33% net profit and see how the "tax cost as % of sell price" builds up in only a few levels. In addition, let's say the example represents the classical "bread" example with: L1 = Farmer, L2 = Miller, L3 = Baker, L4 = Distributor, L5 = Grocer, L6 = Consumer. As can be seen, by the time we reach L6, the embedded tax ("tax cost as % of sell price")has reached 33.88%. This would mean that the consumer is paying a very healthy step-up in the price of bread due solely to embedded tax costs.
At any rate, taking the example and setting the net profit to 10% and using the very common (and perhaps even low) tax rate of 25%, you STILL end up with something like 14.4% tax costs as a % of sell price at Level 6. ======================================
level 1 2 3 4 5 6
init. cos sell price $1.15 $1.33 $1.54 $1.77 $2.04 $2.36
$1.00 cost $1.00 $1.15 $1.33 $1.54 $1.77 $2.04
tax rate profit before tax $0.15 $0.18 $0.20 $0.24 $0.27 $0.31
25.00% tax $0.04 $0.04 $0.05 $0.06 $0.07 $0.08
markup net profit $0.12 $0.13 $0.15 $0.18 $0.20 $0.24
15.38% net profit % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
accumulated $0.04 $0.08 $0.13 $0.19 $0.26 $0.34
tax paid
tax cost as 3.33% 6.22% 8.72% 10.89% 12.77% 14.40%
% of sell price ======================================= If we take the commonly-described "bread" example you can still easily see that bread would be a good bit cheaper for the consumer - not even counting compliance savings - were it not for these caxcading, embedded taxes.
This is really what the embedded taxes discussion is all about and it has nothing at all to do with income taxes on wages nor do you have to be an economist to grasp what is involved. So to pretend that a single economist was making such rash conclusions or that he was the only one used for economic information by the FairTax folks is simply not true. As can be seen here, there is certainly room within the business income tax area for a good bit of price reductions particularly when compliance costs are included as well.
In this sort of economic nonsense (see Nightie's #66 this thread), the opponents of the FairTax only use CORPORATE income taxes as though there were no other business income taxes. That is merely a dishonest way of "reducing the base" as it were to pretend that the FairTax does not save enough in cost reductions to amount to anything (and so that they can claim dishonesty of the part of FairTax supporters).
In fact even a casual inspection of the cascading embedded tax cost example I gave in post #75 clearly show that there is definitely room in the current income tax system for price reductions due to embedded tax costs. These guys can't bear to admit that (in fact, it trashes their arguments).
No Nightie, the table is correct - you're the one who is irrelevant. Shame on you for being so truthless.
The VAT is, in fact, quite easy to evade and there have been many articles which point this out.
I suggest you read them. (You can look them up ... they are numerous).
You go dowwn the list, dum-dum. My comment stands.
Perhaps you should read #48 since its meaning has passed you by. In one ear and out the other as it were.
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