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Old 05-29-2009, 07:06 AM   #41
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I'm not a fan of "hidden" taxes. I wish taxes were broken out as a separate line item for everything we buy. I think it might open some eyes if we saw the $2.39 gallon of gas sold as $1.79 plus 60 cents state and federal tax.

I'd prefer to have it more obvious to everyone how much they are paying In taxes without realizing it.
This site may prove to be useful.
Gas Prices - MSN Autos
It did not show the breakout of base price and taxes, but with a little digging, it might pop out. I couldn't find the details. The data source is referenced here Gas Prices Information - MSN Autos
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Old 05-29-2009, 08:07 AM   #42
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There is one Federal Tax benefit - VAT collects money from illegal operations such as from illegal drug dealers. Currently, these people do not pay income taxes but would pay a national sales tax on the things they buy.
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Old 05-29-2009, 09:29 AM   #43
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There is one Federal Tax benefit - VAT collects money from illegal operations such as from illegal drug dealers. Currently, these people do not pay income taxes but would pay a national sales tax on the things they buy.
Right, either a VAT or a National Retail Sales Tax (or "Fair Tax") would do that. Likewise, tourists to the US would pay taxes on their hotel rooms, food, etc purchased in the US. Illegal aliens, too. And the large number of people who earn money in the "grey" economy (working for cash) would pay taxes when they buy things. One unanswered question is how much a national retail sales tax would increase this grey economy--a 20-30% tax would provide quite an incentive to sell things outside the system at lower cost. Still, it probably wouldn't be any worse than cheating under the present system. And if you buy a "new" grey market car or dishwasher, where do get warranty service? BTW, the "Fair Tax" {I hate that name!} version of the national retail sales tax is the most "mature", as it is presently a bill (HR25 and S296) under consideration. Under the Fair Tax, there's no tax charged for used goods (hey, everyone in favor of reducing landfill waste should be in favor of this!). More details/FAQs at this site. There's also some very thorough, balanced pro/con on the proposal in Wikipedia.
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Old 05-29-2009, 10:14 AM   #44
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The politicians will do everything possible to get this passed. It adds more money for them to spend, and it hides it from the public that will pay it. It is easy to increase in very small increments, who is going to complain about a tenth or quarter of a percent compared to 4% increase in inflation. It will be passed as 'the only way to pay for health reform'.
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Old 05-29-2009, 02:17 PM   #45
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I live in Germany right now - the VAT percentage is 16%. When you buy something, you see the total price and then below that they show the amount of the total that is the VAT tax. When we travel to other countries, they will show the percentage of the VAT tax on items which have different percentages. For example, last weekend in Iceland, it showed the VAT tax on wine to be 34%.

Usually food stuffs (groceries) are not VATted, just material goods or finished goods.

It is an onerous tax like sales tax - I cringe to think that there would be a national sales tax and then a local one - those average between 6-10% at city/county/state levels.
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Old 05-29-2009, 08:36 PM   #46
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and it hides it from the public that will pay it.
I'm not sure about that. I just rented a car for a trip to Scotland and I can tell you my VAT is 15.62 pounds.

When I earn $1 from freelance work here in the states I can't tell you how much I'll owe in taxes until I pay my accountant.

And for most salaried folks, taxes disappear from their pay check every week. Many probably have no clue how much they ultimately pay. Most think their tax bill is the fraction they pay, or get back, on April 15th.
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Old 05-29-2009, 08:55 PM   #47
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When income tax rise to unacceptable level, I intend to scale back on work. The Labor government in the UK wants to raise the top bracket to 61%. If similar thing comes to bear in the US ,the diminishing return on each additional dollar will not be worth the extra time,effort and wear and tear on the mind and body.

Introduction of a VAT, especially at a rate of 25%, will mean that I will be even more selective in what I want to spend my money on. Because true essentials will not have VAT, that additional tax may bring less than government wants, if everyone buy only what he truly needs and weighs cost vs benefits carefully.
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Old 05-29-2009, 09:06 PM   #48
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if everyone buy only what he truly needs and weighs cost vs benefits carefully.


If people are happy to spend $1,000 for a designer hand bag, or $75,000 to have a certain emblem on the hood of their automobile, or even $2.50 for a fifty cent cup of coffee, do you really think a 25% VAT is going to change consumption behavior?

It's the perfect anti-supply side tax. All the yuppie go-getters will just have to work 25% harder to afford all the nonsense they feel they have to own to justify their inflated self worth. It's perfect!
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Old 05-29-2009, 09:29 PM   #49
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I'm not sure about that. I just rented a car for a trip to Scotland and I can tell you my VAT is 15.62 pounds.
Yes, it's truly easy to figure out how much you paid in VAT, because, as my example above shows, the consumer pays the whole tax. So if the VAT is 20%, from the consumer prospective, it is no different than paying a 20% sales tax on everything you buy.
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Old 05-30-2009, 03:36 AM   #50
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A real economy-killer, at least as far as non-essential purchases (and industries) go. The only way a VAT would work in the U.S. is if it replaces the income tax; and we know what the chance of that happening is!

For me, a 15% VAT means I simply buy 15% less stuff, because I spend 100% of my take-home pay on stuff now. And I suspect I'm not the only person in that position these days. Anyway, the economy would suffer, I believe. And people would feel a lot poorer (because they'll still be paying that income tax.)
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Old 05-30-2009, 06:45 AM   #51
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Just returned from a trip there, I've got a pile of receipts from Germany with 19% VAT, 7% on groceries. It was 16% a year or two ago. I was there as it was being raised-- lots of talk, lots of drama advertising, lots of rushing to buy big-ticket stuff (including by me). Afterwards? As far as I know, nothing. I don't think there was even much of a drop because of the sales surge. Just a reduced projected national debt. Of course, this is in a country where most people can figure out not to spend more than they have. Your mileage may vary.
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Old 05-30-2009, 08:27 AM   #52
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It's the perfect anti-supply side tax. All the yuppie go-getters will just have to work 25% harder to afford all the nonsense they feel they have to own to justify their inflated self worth. It's perfect!
This is what's wrong with the tax system. We all want the taxes to paid by the *other* guy -- and if only hits people whose lifestyles are loathesome to me, so much the better -- serves 'em right for not living the way I want them to.

Yep, it's always a good time to raise taxes on everyone else...
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Old 05-30-2009, 09:19 AM   #53
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If people are happy to spend $1,000 for a designer hand bag, or $75,000 to have a certain emblem on the hood of their automobile, or even $2.50 for a fifty cent cup of coffee, do you really think a 25% VAT is going to change consumption behavior?
In some sense the VAT is discretionary, so if some people chose to pay the additional levy for the lifestyle they prefer, that's their prerogative. But I think that group you described represents a small portion of the population. The VAT, like the luxury tax on yachts the congress passed a few years back, and then had to repeal because it nearly destroyed the boat building industry, will make most people think twice before an optional purchase. It will have a negative effect on a number of industrial sectors and may generate less revenue then the government think it will bring in.
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Old 05-30-2009, 10:30 AM   #54
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In some sense the VAT is discretionary, so if some people chose to pay the additional levy for the lifestyle they prefer, that's their prerogative. But I think that group you described represents a small portion of the population.
Change the word "discretionary" to "quality of life" and you get a better insight into the issue.

It is not levied only on luxury goods but everything from hobby gear to bedding.
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Old 05-30-2009, 11:44 AM   #55
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Change the word "discretionary" to "quality of life" and you get a better insight into the issue.

It is not levied only on luxury goods but everything from hobby gear to bedding.
I know what you are saying. But the price differentials between items are often a lot more than the quality differentials, so one can still use discretion as to which item to buy. If one still choose to live below their means, paying 25% more on $25 for something is a lot less dreadful than paying 25% more on $250 for a similar item with a brand name. has more bells and whistles, but performs the essential function more or less the same.
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Old 05-30-2009, 04:43 PM   #56
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I'm not a fan of "hidden" taxes. I wish taxes were broken out as a separate line item for everything we buy. I think it might open some eyes if we saw the $2.39 gallon of gas sold as $1.79 plus 60 cents state and federal tax.

I'd prefer to have it more obvious to everyone how much they are paying in taxes without realizing it.
Well in Europe they include the VAT in the prices of all items, including food at the restaurant. They include the gratuity too.

Then you figure after the exchange rates what you're paying but since all the prices are that way, it doesn't stand out, especially after awhile.
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Old 05-31-2009, 06:52 AM   #57
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In Germany a computer-generated receipt will always clearly list the VAT, including the percentage, if you care to look. Maybe it's required to, I don't know. Regardless of the rate, it works much better to know the final cost as you're shopping, not as you're paying.

I speculate that the obscuring of full costs in the USA by not listing taxes in prices is in the national character, along with unpayable mortgages and other debts, personal and governmental.
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Old 05-31-2009, 09:49 AM   #58
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Yeah, I would expect a VAT might be added into the mix to cover health care but don't expect the income tax to disappear.
Keeping the income tax at a progressive level would be one way to help offset the regressiveness of a VAT.
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Old 05-31-2009, 12:40 PM   #59
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I, for one, come down against a VAT tax UNLESS it truly replaces the national income tax. However, I've never seen a tax repealed totally, only reduced, so I'll let past behavior dictate what will probably happen in the future. Have you ever looked at your phone bill and seen all those taxes/fees? None of them have been repealed - and some have been around long past their original intent.
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Old 05-31-2009, 12:41 PM   #60
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Keeping the income tax at a progressive level would be one way to help offset the regressiveness of a VAT.
I suspect that keeping the income tax would also increase the opposition to creating a VAT. If a national sales tax doesn't include the repeal of the 16th Amendment, I'm probably not on board.
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