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I guess he proposes to increase the VAT for big players instead of creating an all new form of taxation.

by dorgo 9y ago

kgwgk 9y ago
And how would that work? Let’s say I’m a company that can choose to buy advertising from Facebook for 99 plus 25% VAT or from someone else for 100 plus 20% VAT. If I can deduct the VAT paid I get a better deal going with Facebook.
- 3pt14159 9y ago
  I'm arguing that all companies should have the same VAT rate. If for some reason we want to apply a higher rate to a company it should be via lower base deduction.
  - kgwgk 9y ago
    The whole discussion is about targetting some particular companies. That explains why a VAT, which is paid by the consumer anyway, wouldn't be better. If you’re going to distort the VAT chain to be get something equivalent to a tax on the sales of specific companies, how is it going to be better?
    - 3pt14159 9y ago
      Because by doing a standard deduction you're keeping certain mathematical properties that VATs provide, like the ability to sell a good multiple times without paying layered taxes. Standard deductions stop this warping while still providing the warping that is desired. And saying a VAT is paid by the consumer is silly. All taxes are paid by the consumer ultimately. What matters is capturing the taxation in a locality where the infrastructure used is roughly paid for by entities utilizing it. If CocaCola sells $10B of Coke in the EU, a VAT captures that and it should. If a financial services firm sends someone out to consult the Saudi Government the transaction is (and should be) outside the EU. When the income is repatriated is when corporate taxes kick in to cover the infrastructure that is engaged with production. Too high of a VAT and firms shift manufacturing jurisdiction since VATs naturally discourage exports. Too high of a corporate tax and firms keep corporate income offshore and lobby for reduced taxation rates.
      - kgwgk 9y ago
        > If CocaCola sells $10B of Coke in the EU, a VAT captures that and it should. If I understand correctly, you propose to eliminate corporate taxes and go from the current system (taxes on consumption and taxes on corporate profits) to a pure consumption-tax system. In that case, when CocaCola sells $10B or LossMakingSoda sells $10B (or ExtremelyProfitableCo sells $10B) the taxman gets the same amount (directly from the consumer, and not just conceptually). It’s natural that governments want to extract more money from those companies that have more money.

I guess he proposes to increase the VAT for big players instead of creating an all new form of taxation.

by dorgo 9y ago

I guess he proposes to increase the VAT for big players instead of creating an all new form of taxation.

And how would that work? Let’s say I’m a company that can choose to buy advertising from Facebook for 99 plus 25% VAT or from someone else for 100 plus 20% VAT. If I can deduct the VAT paid I get a better deal going with Facebook.

3pt14159 9y ago
I'm arguing that all companies should have the same VAT rate. If for some reason we want to apply a higher rate to a company it should be via lower base deduction.
- kgwgk 9y ago
  The whole discussion is about targetting some particular companies. That explains why a VAT, which is paid by the consumer anyway, wouldn't be better. If you’re going to distort the VAT chain to be get something equivalent to a tax on the sales of specific companies, how is it going to be better?
  - 3pt14159 9y ago
    Because by doing a standard deduction you're keeping certain mathematical properties that VATs provide, like the ability to sell a good multiple times without paying layered taxes. Standard deductions stop this warping while still providing the warping that is desired. And saying a VAT is paid by the consumer is silly. All taxes are paid by the consumer ultimately. What matters is capturing the taxation in a locality where the infrastructure used is roughly paid for by entities utilizing it. If CocaCola sells $10B of Coke in the EU, a VAT captures that and it should. If a financial services firm sends someone out to consult the Saudi Government the transaction is (and should be) outside the EU. When the income is repatriated is when corporate taxes kick in to cover the infrastructure that is engaged with production. Too high of a VAT and firms shift manufacturing jurisdiction since VATs naturally discourage exports. Too high of a corporate tax and firms keep corporate income offshore and lobby for reduced taxation rates.
    - kgwgk 9y ago
      > If CocaCola sells $10B of Coke in the EU, a VAT captures that and it should. If I understand correctly, you propose to eliminate corporate taxes and go from the current system (taxes on consumption and taxes on corporate profits) to a pure consumption-tax system. In that case, when CocaCola sells $10B or LossMakingSoda sells $10B (or ExtremelyProfitableCo sells $10B) the taxman gets the same amount (directly from the consumer, and not just conceptually). It’s natural that governments want to extract more money from those companies that have more money.