Unemployed Man

[richardhutnik]

Kasz216 said:

richardhutnik said:

Kasz216 said:

 

Why?

Why would it drive up prices when we aren't raising taxes in any way.

We're still getting the same tax money, but from more spread out companies.

Foreign products may go up slightly, but american products should drop in price.

http://en.wikipedia.org/wiki/Value_added_tax

In the VAT tax, what you have is something equivalent to a sales tax.  Each part in the production chain, a tax is added.  I have been informed, when taxes are discussed that taxes are always passed on to the consumer.  In the case of sales tax in the United States, the sales tax is added to the value of the products.  Goods cost more as a results. Taxes ARE added here, in the consumption side, where costs are determined.

Yeah, taxes are always passed on to the consumer.

Said taxes are ALREADY passed on to the consumer.

The taxes corporations pay now are already added on, therefore if you replaced them with a different kind of tax, prices stay the same.

The current system, taxes are based on PROFITS a business has.  Everything else is taken out of the equation.  So, the current system is taxes AFTER all expenses are taken out.  With VAT, it isn't the same thing.  It is a tax on consumption, rather than profits.  The later is more likely to impact consumer spending.  What do you think happens if you end up putting a VAT tax on items around 20%, which is said to be needed to make up for loss revenue scrapping the current system.  Do you think a nationwide sales tax around 20% or higher isn't going to make items more expensive than they are now?

By the way, you won't get the current system scrapped.  You will get VAT ON TOP OF what is currently being done.