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Old 05-31-2009, 02:33 PM   #61
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Well previous proposals involving a VAT effectively reduced the overall tax receipts especially for the highest income brackets.

Advocates talked up the simplicity and "fairness" of the scheme but would shut up when asked about whether it was "revenue-neutral."

So it was as much a tax cutting scheme as it was a tax reform scheme.


But VAT now seems to be coming up in the context of closing the budget gap and fixing things like health care.

So it may be a way to increase tax revenues.
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Old 06-01-2009, 04:06 PM   #62
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Originally Posted by ziggy29 View Post
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.
I am often "not on board" for various gumment actions, but it hasn't stopped them yet...
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Old 06-04-2009, 02:36 PM   #63
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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.

Here's
what happened in Europe when they instituted the VAT in addition to their existing income tax. Hint: Taxes didn't go down.

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In 1965, before the VAT swept across Europe, the average tax burden for advanced European economies (the EU-15) was 27.7% of economic output, roughly comparable to the U.S., where taxes were 24.7% of GDP, according to data from the Organization for Economic Cooperation and Development OECD). European nations began to impose VATs in the late 1960s, and now the European Union requires all members to have a VAT of at least 15%. Results? By 2006, the OECD reports that the average tax burden for EU-15 nations had climbed to 39.8% of GDP. The tax burden also has increased in the U.S., but at a much slower rate, rising to 28% for that year.
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Old 06-04-2009, 04:33 PM   #64
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Lies, damned lies, and statistics. I don't know how reasonable the Cato Institute numbers are, but a tax comparison between the USA and Europe is easily manipulated. In the USA your tax payments might include local property, income and sales, state income and sales, and federal income including social programs. European countries, as far as I know, do not have such a labyrinth of taxes, and probably use the VAT as a more primary source of funding. My biggest single USA tax bill is my local property tax. Our german house, worth more than our american one, is a few hundred Euros. If nothing else, it's a much nicer arrangement for retired and elderly people. You've got to judge an American VAT based on what the American politicians do with it, not on what the Europeans do with theirs.

edited to add- and I don't think they mentioned that the national debt likely moved inversely to the tax burdens in the two areas, did they?
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Old 06-04-2009, 05:13 PM   #65
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edited to add- and I don't think they mentioned that the national debt likely moved inversely to the tax burdens in the two areas, did they?
I'm not sure of the historical change in national debt over time, but the US's external national debt is roughly equal to our annual GDP (or it will be by the end of the year). Not sure what the eurozone's total debt is, but the external debt of the top four euro debtor nations (UK, France, Germany, Spain) sums to $23 trillion give or take. That by itself, ignoring the debt of the rest of the eurozone countries, is more than 150% of the entire eurozone's GDP (PPP). The Eurozone isn't exactly a debt-free, responsible borrowing group of countries. High taxing and high spending is more like it.
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Old 06-07-2009, 12:22 PM   #66
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I'm not sure of the historical change in national debt over time, but the US's external national debt is roughly equal to our annual GDP (or it will be by the end of the year). Not sure what the eurozone's total debt is, but the external debt of the top four euro debtor nations (UK, France, Germany, Spain) sums to $23 trillion give or take. That by itself, ignoring the debt of the rest of the eurozone countries, is more than 150% of the entire eurozone's GDP (PPP). The Eurozone isn't exactly a debt-free, responsible borrowing group of countries. High taxing and high spending is more like it.
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Old 06-07-2009, 12:34 PM   #67
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And? Our annual GDP roughly equals our external debt. Many other industrialized countries fare much worse in their debt-to-GDP ratio. From an macro-economic standpoint, we have more room to increase taxes to pay down debt than other industrialized countries where the tax burden is much higher.
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Old 06-07-2009, 01:17 PM   #68
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True.

Here is a quote from the Public Accounts of Canada, 2007-2008:

The accumulated deficit (the difference between total liabilities and total assets) stood at $457.6 billion as of March 31, 2008, a decline of $105.2 billion from its peak of $562.9 billion as of March 31, 1997. The accumulated deficit-to-GDP (gross domestic
product) ratio was 29.8 percent, down sharply from its peak of 68.4 percent as of March 31, 1996, and was at its lowest level since March 31, 1981.

Unfortunately this happy situation is now reversing as the government attempts to spend its way out of the recession, including purchasing (on behalf of taxpayers) a 10% chunk of GM and Chrysler.

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