Obama's get rich quick scheme: Adopting a VAT Tax.

[SwampdonkeyPLD]

We are still currently paying fewer taxes right now than at any point since WWII right?

Just wanna make sure that it's true that Obama is now and has been governing the least-taxed populace in modern America.

Why is that such a big deal to you?

Individuals may still be taxed the same, before the end of the year, but if taxes go up on corporations it's not like that doesn't hurt everyone else.

[Kuya]

Why would taxing corporations hurt everyone else

[Max™]

Because you touch yourself at night.

[SwampdonkeyPLD]

Corporations don't pay taxes, they just raise prices. And I guess this next point depends on whether or not you drink the kool-aid. Either corporations could otherwise use that tax money for new investment, or you're just preventing the CEO's from going on long vacations and buying a new private jet every year.

[Kuya]

So, we can't tax corporations ever or else they will just raise prices on us?

[Kuya]

Also, how far can the price of a certain item or service rise before people will refuse to buy it?

[SwampdonkeyPLD]

Right. I don't know, probably depends on the product.

[Kuya]

If people are only willing to buy certain items at certain price ranges, then there is a limit to how much the price of a certain item can rise.

[SwampdonkeyPLD]

Of course, but I don't see your point.

[Kuya]

Taxes may rise, but the price of certain services and items can only rise up to a point.

[zoobernut]

I think using the argument that taxing corporations will hurt us because they will raise prices is just about the same as using the argument that you can't tax people because then they will buy less crap.

[SwampdonkeyPLD]

Taxes may rise, but the price of certain services and items can only rise up to a point.

At which point, corps may stop making the product altogether, i.e. people lose their jobs. But on the way to that point, people have less disposable income.

[sruon]

VAT isn't a bad move when you have a $8 trillion debt.

[Kuya]

At which point, corps may stop making the product altogether, i.e. people lose their jobs. But on the way to that point, people have less disposable income.

Sure, but since taxing doesn't have to be an extreme, a happy medium can be found before reaching that end. Companies, particularly big companies, can take a hit on their profits and still continue to function and turn a profit, and there is a limit to how many employees they can fire before they start taking a hit on profits. Of course, we're talking about taxes on companies (especially large companies) not taxes on consumers or employee income.

[SwampdonkeyPLD]

Sure, but since taxing doesn't have to be an extreme, a happy medium can be found before reaching that end. Companies, particularly big companies, can take a hit on their profits and still continue to function and turn a profit, and there is a limit to how many employees they can fire before they start taking a hit on profits. Of course, we're talking about taxes on companies (especially large companies) not taxes on consumers or employee income.

Nothing to disagree with here.

[Yugl]

Corporations do not have to raise prices to handle new taxes. They can avoid some taxes through the magic of America's multiple points of obstruction. The feebleness of our system (A consequence of our distrust in government) has ironically lead to multiple avenues that allow corporations to bypass taxes. In fact, they may even hire lawyers for the purpose of attaining this goal.Consequently, we're left with the reality that even though we can and already do tax wealthier individuals more often, they can avoid paying these taxes through the system.

[Marootsoobutsu]

VAT isn't a bad move when you have a $8 trillion debt.

That's actually about the worst time to implement it. You want to impose a tax that hits business like this during boom times, when unemployment is at a bare minimal, and employers have more capital than capacity to expand. At that point, they don't have as great a need to raise prices to make up the difference (or at least, they won't need to raise it the full rate of the tax increase), and business owners don't face a "Fire someone/don't hire someone" choice in response. Some taxes, like personal income tax, don't do as much to influence business as others. Yes, income tax influences businesses, but it's basically, "Okay, it costs me X dollars more to employ a person". Things get more complex after that, but that complexity starts to apply to all taxes; the simple aspects don't.

It should also be noted that more people work for small businesses than for mega-corporations; I'm unsure what percentage would be hit with value added (some services would get the hit, others wouldn't, and I don't have that breakdown), so couching things in the, "Sure Megacorps could take a hit" terms isn't really looking at the whole economy. Too, if, say, Toyota makes about 50 bucks on each new car sold (well, the dealership does, if you don't finance... if you finance they make a ton), adding a tax on that is going to drive the price through the roof-- the leather, steel, plastic, electronics, lightbulbs, etc... are each going to have VAT added at every stage. Alternatively, look at gas companies. I know, they're the big-bad evil guy, but for the most part, they're basically making a couple pennies on the dollar (In Washington state, the state government makes more profit on gasoline sales than the gas company does); they make huge profit, because they have amazingly high volumes of sale; their profit per sale is already pretty minimal, and any new expense will necessitate an increase in price.

To give an idea of how things would really be effected, look at the prices at Walmart, and then compare them to your local high-end grocery store. Whatever moral or ethical issues one might have about Walmart, they do have absolutely razor-thin margins of profit... and so do their vendors (Some, like Vlassic, were almost driven to bankruptcy when costs rose). They don't exist by making huge profits on a single sale; they exist by selling thousands or millions of products. A 1% rise in their cost often isn't something they can just "suck up". A 10% rise in their material costs is certainly not something they can simply absorb at a lower profit rate (of course, a 10% increase in materials cost is going to have varying impacts in total cost based on the salaries, rent, and other non-material costs associated with running the business, but since this is most often tied to manufacturing sectors, material costs aren't insignificant, either).

None of this is to say whether or not we should have a VAT, but if we do... and if we do it *right now because omg we're desperate*, people will lose jobs (not because of the VAT itself, but because this is already a really, really bad market, and hardships on employers is not the way to keep people employed), prices will go up,and things will get worse. Which is, of course, why there has been no serious look at implementing the VAT right the hell now because omg we're desperate. Later, when things are booming? Mebbe; I don't know. Without a hefty re-examination of tariffs, it seems mostly like a way to have more manufacturing sent out of the country... and while America is still the world's leading manufacturer (I was kind of surprised to find that out), that doesn't mean we want to give up that advantage and independence.

Personally, the VAT doesn't bother me *that much*, though it's another way of hiding taxes that are being paid. I'd love it if it were broken down, "Here's how much of this product's cost has gone to the government", but then, I'd also love it if there were no tax withholdings and people actually had to plan and save to pay the IRS every April.

[Kuya]

I think that before we discuss the proper implementation of tax and spending in government, we must first eliminate the virus known as modern American conservatism. It's anathema to good public policy. Otherwise, we'll be stuck debating whether taxes are evil while mass unemployment occurs/social services decay.

[SwampdonkeyPLD]

I think that before we discuss the proper implementation of tax and spending in government, we must first eliminate the virus known as modern American conservatism. It's anathema to good public policy. Otherwise, we'll be stuck debating whether taxes are evil while mass unemployment occurs/social services decay.

Kuya, read your last sentence. You think raising taxes will help unemployment? And curing unemployment would mean you don't need the social service that liberals love, welfare.

[Egon]

I think that before we discuss the proper implementation of tax and spending in government, we must first eliminate the virus known as modern American conservatism. It's anathema to good public policy. Otherwise, we'll be stuck debating whether taxes are evil while mass unemployment occurs/social services decay.

Silence those who disagree.

All Hail Kuya!!
AMIRITE?!