Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-05-2010, 06:06 PM   #61
gone traveling
 
Join Date: Oct 2009
Posts: 125
One argument I have heard in favor of the VAT is that it is simply another way to tax, such that the income tax does not have to be so high, which would make the "adverse economic behavior" due to the income tax rate be less strong - i.e., doing things to lower taxes legally OR illegally. With a VAT especially, since there would be a tax and various steps along the way, there would be less of an impetus to cheat at each point, rather than at one single point.
__________________

__________________
swampwiz is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-05-2010, 06:08 PM   #62
gone traveling
 
Join Date: Oct 2009
Posts: 125
Quote:
Originally Posted by Alan View Post
Texas is almost twice the physical size of Germany
I have driven all the way on I-10 - I love the sign that says "El Paso 869"!
__________________

__________________
swampwiz is offline   Reply With Quote
Old 04-06-2010, 12:13 AM   #63
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,726
North South US 83 is the equivalent of I -10 in the east west direction and runs 783 miles, going from Brownsville, all the way to the Ok Panhandle, thru the Texas Panhandle. It is very much a country road with the only large cities being Brownsville, Laredo and Abline
__________________
meierlde is offline   Reply With Quote
Old 04-06-2010, 03:04 AM   #64
Recycles dryer sheets
 
Join Date: May 2005
Posts: 189
Quote:
Originally Posted by meierlde View Post
North South US 83 is the equivalent of I -10 in the east west direction and runs 783 miles, going from Brownsville, all the way to the Ok Panhandle, thru the Texas Panhandle. It is very much a country road with the only large cities being Brownsville, Laredo and Abline
Wow, VAT to distances in Texas, reminds me of this thread. Anyway it is a forum on ER.

I hazily remember more than one person telling that they have drive from one end to other on this road.
__________________
landover is offline   Reply With Quote
Old 04-06-2010, 03:35 AM   #65
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,072
OK - I've driven those Texas roads, too. Yes, sometimes mind-numbing and a book on tape or great music in the car is a requirement :-) As for thread wandering, I raise my hand - the point was about using ideas from smaller regions and thinking they would scale easily - I don't believe that is so.

Back to the VAT - cheating - hmmm, well, basically the VAT ends up being paid by the consumer. Like basic economics, the costs get passed along the chain until the end.

As for the OP's question - a VAT making an IRA conversion to a Roth a double-taxed event - perhaps. Depends on what the money in the Roth is used for and if the VAT aspect is resident in that particular transaction (see my previous posting on no VAT on food). I'll second Nords statement that basing your retirement investing decision on future tax policy is probably a folly as it changes.....quite a bit (70-90% income tax during Hoover and WWII).

Sort of off topic - I fear a VAT in the USA. It is very difficult for bureacracies (governments) to 'rollback' or turn off spigots of funds. Most of the people on this board would 'restrict spending' if the financial situation became dire. Yes, the offensive approach of finding more resources is a valid one, however, it seems our government (and most others around the world) isn't very good at the defensive approach. Once a VAT is placed in, it will not go away....and it will go up. Last time I was here in Germany the VAT was 15-16%. They raised it to 19% a few years ago. It has been steadily rising since it was enacted. ~20% of your money is a LOT. And, if they raise the VAT, that's an automatic inflation jump for that year - outside of natural economic forces.
__________________
Deserat aka Bridget
“We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm.” - George Orwell/Winston Churchill
deserat is offline   Reply With Quote
Old 04-06-2010, 05:44 AM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Gone4Good View Post
With the foreign import tax, you point to a reference where separate treaties reimburse the VAT . . . the same could be done with a NST.
I suppose, but I haven't seen proposals to do that. Simplicity is a very good thing, and if we get into identifying "foreign content" (labor? materials?) so we can appply a NRST differently for imports than domestically produced goods, it will be so messy and complex (i.e. full of compliance costs and opportunities to cheat) that we might as well have a VAT.

Quote:
Originally Posted by Gone4Good View Post
And couldn't we "pre-bate" a certain amount of the VAT and tax everything too?
Only if we are willing to identify the ultimate retail purchasers (which you previously cited as a problem) and set up the "prebate" mechanisms and bureaucracy on top of the byzantine VAT bureaucracy. And, the folks pushing this VAT idea want to keep the FIT, too, so we'd keep that entire government structure and drain on our economy. It would just be a full employment program for government accountants.

HR 25 calls for eliminating the income tax and payroll taxes, and they would be replaced by a NRST. That's a different thing than adding a new tax on top of the cesspool of a tax code we have already.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 04-06-2010, 07:10 AM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,646
I love OP's VATs - they helped me sell me much loathed boat in 2005. I listed that beast online and got three inquiries, all from Europe. I finally sold the thing to a guy from Belgium. The only hassle for me was that I had to drive it up to Baltimore to load on a container ship (that is an interesting process). The Belgian guy saved enough on VAT to pay for the transportation and still come out way ahead. He even researched accessories (Garmin Chart Plotter, etc) online and sent me a couple of thousand to buy them for him and hide them in the gunwales. Taxes are a motivator everywhere but he wouldn't have traded in his health care
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 04-06-2010, 08:42 AM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RonBoyd's Avatar
 
Join Date: Dec 2007
Location: Denver, Colorado
Posts: 5,280
The Highest Taxes in the World | Taxes | Money/Investing | Mainstreet

Taxation of Wage Income - 2008.pdf
__________________
"It's tough to make predictions, especially when it involves the future." ~Attributed to many
"In theory, there is no difference between theory and practice. But, in practice, there is." ~(perhaps by) Yogi Berra
"Those who have knowledge, don't predict. Those who predict, don't have knowledge."~ Lau tzu
RonBoyd is offline   Reply With Quote
Old 04-06-2010, 08:49 AM   #69
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
RonBoyd:

Those "AllIn" tax rates only include federal tax plus SS. They exclude state/local taxes plus property/sales/fuel taxes and other "user fees".

I am not convinced that the conclusion of the article (ie- we aren't taxed so much) is valid.

All-in:
The all-in tax rate, calculated as the combined central and sub-central government income tax plus employee

social security contribution, as a percentage of gross wage earnings.
__________________
MasterBlaster is offline   Reply With Quote
Old 04-06-2010, 09:01 AM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Quote:
Originally Posted by MasterBlaster View Post
RonBoyd:

Those "AllIn" tax rates only include federal tax plus SS. They exclude state/local taxes plus property/sales/fuel taxes and other "user fees".

I am not convinced that the conclusion of the article (ie- we aren't taxed so much) is valid.
Don't forget embedded taxes e.g. Corp. Taxes that are ultimately paid by the end user.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Old 04-06-2010, 09:05 AM   #71
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Quote:
Originally Posted by deserat View Post
Back to the VAT - cheating - hmmm, well, basically the VAT ends up being paid by the consumer. Like basic economics, the costs get passed along the chain until the end.
Some of the cheating I remember are:
- Collecting VAT but not giving it to the Gov't
- Using a higher VAT rate to the consumer and giving the Gov't the proper amount
- Setting up a Company and reclaiming VAT never paid to a supplier
- Reclaiming VAT on items not allowed by VAT laws
- Bribing VAT auditors
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Old 04-06-2010, 09:55 AM   #72
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by samclem View Post
I suppose, but I haven't seen proposals to do that. Simplicity is a very good thing, and if we get into identifying "foreign content" (labor? materials?) so we can appply a NRST differently for imports than domestically produced goods, it will be so messy and complex (i.e. full of compliance costs and opportunities to cheat) that we might as well have a VAT.
I don't think the NST is any more simple. In a VAT everyone pays the tax but manufacturers get to deduct their "cost of good sold". With a NST, you'd need something similar where businesses would get refunded the tax they paid for items for resale. It seems simple enough to adjust the deductions so that they're discriminatory against whatever group you wanted to target. That's what I understand is happening with the VAT.

Quote:
Originally Posted by samclem View Post
Only if we are willing to identify the ultimate retail purchasers (which you previously cited as a problem) and set up the "prebate" mechanisms and bureaucracy on top of the byzantine VAT bureaucracy.
We have to do that anyways, as explained above.


BTW, I don't really have any vested interest in a NST vs. VAT. I don't think either has a snow ball's shot in heck of becoming law. But just from a theoretical point of view, the two systems seem really very similar to me.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 04-06-2010, 10:02 AM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,288
Quote:
Originally Posted by deserat View Post
Heck, it would take me 11-12 hours to drive from Sacramento, CA to Phoenix, AZ, in the USA and I haven't even gone through two states!
Quote:
Originally Posted by Alan View Post
Texas is almost twice the physical size of Germany

Alan beat me.... but you can drive 11 to 12 hours and not get through the state... As the saying goes 'the sun has risen and the sun has set and you have not left TEXAS yet'....


Now let's see if someone from Alaska chimes in
__________________
Texas Proud is offline   Reply With Quote
Old 04-06-2010, 10:11 AM   #74
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Texas Proud View Post
. but you can drive 11 to 12 hours and not get through the state... .
Yep, I had a car like that once . . .
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 04-06-2010, 10:19 AM   #75
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Gone4Good View Post
BTW, I don't really have any vested interest in a NST vs. VAT. I don't think either has a snow ball's shot in heck of becoming law. But just from a theoretical point of view, the two systems seem really very similar to me.
I agree that elimination of the FIT is very unlikely, but I'm not so sure something else won't be added atop it. I do see significant advantages for a NRST vs a VAT from a compliance cost perspective (at least if we look at real-world examples of VATs and the most "mature" proposal for a NRST, as embodied in present House and Senate products). The NRST, because of the "prebate" feature, is a more appropriate replacement for the FIT. Either would be better than the FIT, but I'd rather stick with the FIT than add either on top of it.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 04-06-2010, 11:15 AM   #76
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
I look for no major changes. Our law makers have to find a way to game the system and purchase votes. In order to do this, they will have to maintain high income tax on the 'rich' and lower the tax on the poor. However, to the extent the rich invest and spend outside the US, they will lower their VAT/NRST. The poor on the other hand do not have this option. So the politicians will begin to exempt things from the VAT/NRST, food, clothing, housing, kids cloths, or higher give backs based on income. The end results, the 'rich' will pay. I also expect to se many early retirees classified somehow as 'rich'. It is a small group with little or no political clout, and generally with money. A perfect target for greedy politicians.
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 04-06-2010, 11:35 AM   #77
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
I think it's only a matter of time before we get a VAT. More than 90 countries have some kind of VAT in place and the list is not getting shorter. In most countries, the VAT was introduced in addition to an income tax. Because of the regressive nature of the VAT, the income tax usually has to be made more progressive in order to keep an overall progressive tax system. A VAT is a very efficient way to collect revenues for governments and that's why it is gaining popularity around the world. And while it is generally politically difficult to increase income taxes, small increases in the VAT rate overtime usually go unchallenged which gives governments (IMO) a lot less incentive to control spending because they can always bump the VAT rate when they need to.
__________________
FIREd is offline   Reply With Quote
Old 04-06-2010, 11:41 AM   #78
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Income taxes started out low. They started at 1 percent of millionaires income.

We now all know how that "small" tax ended up.
__________________
MasterBlaster is offline   Reply With Quote
Old 04-06-2010, 12:20 PM   #79
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,288
Some are mentioning that the rich can buy stuff 'over there'... but if it is like most of them, if you bring it back 'here' you are supposed to pay your VAT tax.... not that cheating does not go on...


I bought something online when I lived in London... and the post office would not deliver it to me until I went in and paid my VAT tax on the item... learned my lesson on that one....
__________________
Texas Proud is offline   Reply With Quote
Old 04-06-2010, 01:02 PM   #80
Thinks s/he gets paid by the post
IndependentlyPoor's Avatar
 
Join Date: Jul 2009
Location: Austin
Posts: 1,142
Quote:
Originally Posted by Texas Proud View Post
Alan beat me.... but you can drive 11 to 12 hours and not get through the state... As the saying goes 'the sun has risen and the sun has set and you have not left TEXAS yet'....

Thanks for posting this. It reminded me of a postcard in the rack by the cash register of the only restaurant in the town I grew up in. It said, "The sun has riz, the sun has set, and here we is, in Texas yet!".

The internets is wonderful. Google and yea shall receive.
texas.gif
__________________

__________________
IndependentlyPoor is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tax Brackets and Provisions Little Changed For 2010 haha FIRE and Money 12 10-17-2009 09:43 PM
Are leaseholds a bad deal? ARB57 FIRE and Money 7 01-14-2009 11:34 AM
FIRE Easier If VAT Replaced Income Tax? RetireeRobert FIRE and Money 54 11-16-2007 08:00 PM
roth 401k and roth dont seem good deal mathjak107 FIRE and Money 29 05-29-2006 06:43 AM
making lawyers look bad Martha Other topics 68 06-12-2005 09:23 AM

 

 
All times are GMT -6. The time now is 02:20 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.