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04/25/2010

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Kampet

Thank you for your post. As you mentioned, VAT is more efficient and relatively harmless tax. We shouldn't forget what damage it could make if were not carefully managed. If the VAT is introduced, the income tax could be immediately reduced or abolished. To prevent policymakers' temptations to increase VAT later on, as many countries have experienced, VAT should be written as an amendement to the Constitution, next to law that would prevent policymakers to increase VAT together with income tax. Otherwise, the US economy would resemble the European model of high-tax welfare state. See you...

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The problem is high tax levels and high goverment spendings. Thank you.

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recent history doesn't seem to support the idea. While spending did rise sharply during the Reagan era, since that peak it has been relatively flat at about 20% of GDP since.

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Since a VAT is a tax on the value added by companies at each stage of production of consumer and investment goods, it is similar to a sales tax levied directly on these consumer and investment goods. Usually, a VAT is a fixed percent, such as 10 or 20 percent, of the value added by each company, although often medicines and certain other necessities are exempt. A VAT does not distort consumption decisions relative to savings and investment decisions since it taxes consumer and investment goods at the same rate. An income tax, by contrast, discourages savings and investment because it taxes savings twice: once on the income from which any savings are taken, and again on the income earned later on from any savings.

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Every time the government introduces a new regulation, there will be people who will oppose it. They have to listen to both sides of the issue.

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In my opinion VAT is easy to gather and causes less disturbances in conduct than earnings and most other taxation, health systems have an motivation to increase the VAT eventually. In fact, value included tax charges do usually start low, but usually develop quickly eventually.

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The post display that a VAT would be presented not as a partially or complete alternative for individual and business duty, but rather as an extra tax.

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