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VAT is not regressive. Everyone is taxed at the same rate. Or doesn't matter if rich people spend lower percentage of their income. Sooner or later the money is

VAT is not regressive. Everyone is taxed at the same rate. Or doesn't matter if rich people spend lower percentage of their income. Sooner or later the money is spent and then it will be taxed. If it's nevertheless spent then someone (the rich person!) provided a service for free as they never asked anything back on it. Seriously, it requires understanding of basic linear algebra to see that VAT isn't regressive. The article you linked makes the same mistake. You will be taxed at some point and if you multiply your money by investing before spending it then you're taxed on bigger amount. The rate ends up being the same for everyone.

vidarh 9y ago
> Or doesn't matter if rich people spend lower percentage of their income. Sooner or later the money is spent and then it will be taxed. That'd be true if VAT applied equally to everything, but it doesn't. Your assumptions are invalid.
- bluecalm 9y ago
  It is applied to consumption. Some, most often necessities are taxed less which lessens the burden for poorer people. Instead of dismissing my statement you could at least try to come up with one counter example. Every time I see "VAT is regressive" nonsense it's always based on misunderstanding. Yes, investments are not taxed but that's ok, if a rich person makes 20% a year from investment then they have 20% more money to be taxed once they engage in consumption (hence linear algebra remark). It really is about basic math to realize VAT isn't regressive but proportional (and even slightly progressive as necessities are taxed at lower % in many countries). You can make consumption based taxed more progressive by taxing luxury goods at higher rate (which already many European countries are doing) as well.
  - vidarh 9y ago
    > Every time I see "VAT is regressive" nonsense it's always based on misunderstanding. Yes, investments are not taxed but that's ok There you provide one example yourself. Another is all consumption achieved by moving your consumption to somewhere else with low or no VAT. I've done the math for my own expenditure from back when I didn't earn much to now, and the difference is stark.
    - bluecalm 9y ago
      >>Another is all consumption achieved by moving your consumption to somewhere else with low or no VAT. I didn't. Investments are not consumption. At some point you are going to buy something you can use like a car, a house, food or w/e and there will be VAT there. If you never spend it on consumption then you are in effect providing a free service to everyone (accepting money but never buying anything). If you live in a country with VAT then buying abroad won't help you as you have to pay VAT on imports from non VAT countries. >>I've done the math for my own expenditure from back when I didn't earn much to now, and the difference is stark. Do you have any savings/investments now in comparison to there? What do you think will happen once you want to by something with those savings?

vidarh 9y ago

> Or doesn't matter if rich people spend lower percentage of their income. Sooner or later the money is spent and then it will be taxed. That'd be true if VAT applied equally to everything, but it doesn't. Your assumptions are invalid.

bluecalm 9y ago
It is applied to consumption. Some, most often necessities are taxed less which lessens the burden for poorer people. Instead of dismissing my statement you could at least try to come up with one counter example. Every time I see "VAT is regressive" nonsense it's always based on misunderstanding. Yes, investments are not taxed but that's ok, if a rich person makes 20% a year from investment then they have 20% more money to be taxed once they engage in consumption (hence linear algebra remark). It really is about basic math to realize VAT isn't regressive but proportional (and even slightly progressive as necessities are taxed at lower % in many countries). You can make consumption based taxed more progressive by taxing luxury goods at higher rate (which already many European countries are doing) as well.
- vidarh 9y ago
  > Every time I see "VAT is regressive" nonsense it's always based on misunderstanding. Yes, investments are not taxed but that's ok There you provide one example yourself. Another is all consumption achieved by moving your consumption to somewhere else with low or no VAT. I've done the math for my own expenditure from back when I didn't earn much to now, and the difference is stark.
  - bluecalm 9y ago
    >>Another is all consumption achieved by moving your consumption to somewhere else with low or no VAT. I didn't. Investments are not consumption. At some point you are going to buy something you can use like a car, a house, food or w/e and there will be VAT there. If you never spend it on consumption then you are in effect providing a free service to everyone (accepting money but never buying anything). If you live in a country with VAT then buying abroad won't help you as you have to pay VAT on imports from non VAT countries. >>I've done the math for my own expenditure from back when I didn't earn much to now, and the difference is stark. Do you have any savings/investments now in comparison to there? What do you think will happen once you want to by something with those savings?