6 ms·

Many western countries have very simple or near-automatic tax systems and I would argue that the tax you pay is actually much more visible to residents of such

by koyote 8y ago

Many western countries have very simple or near-automatic tax systems and I would argue that the tax you pay is actually much more visible to residents of such countries. In the UK, for example, most employees do not have to file a tax return. The HMRC files it for them and sends them a letter every tax year with their calculation. It even comes with a nice chart to see how much tax you've paid and where it went to (https://secure.i.telegraph.co.uk/multimedia/archive/02871/taxtable1_2871685b.jpg https://secure.i.telegraph.co.uk/multimedia/archive/02871/ta...). The tax brackets are also very straightfoward and everyone knows which bracket they are in. The same is true with tax on product prices. Everyone knows the tax rate on items because it's a simple number and there's a lot of public discussion whenever politicians decide on reducing/increasing it. If you ask anyone in the UK (or any other country other than the US with VAT) what the current VAT rate is, they will be able to tell you. Good luck getting an answer to such a question from someone in the US; you just pay what the cashier tells you to as VAT depends on so many factors.

edko 8y ago
Technically, there is no VAT in the US. There is sales tax, and it can vary from city to city. I guess that is why it is not included in the price by default.
- koyote 8y ago
  Yep; sales tax, VAT, GST, they are all pretty much the same thing. And the fact that in the US they vary by location was what I was alluding to. > I guess that is why it is not included in the price by default I hear that argument a lot but it does not really make sense to me. The place of purchase knowns what their tax rate is in their current location because the cash register has that information (and I assume this sales tax does not change very frequently?). So why not print out or display the prices with that tax included?
  - gok 8y ago
    No, they are not the same thing. You pay VAT on the value added at each part of the process. So a retailer pays VAT to their wholesaler, unlike American state sales tax systems.
    - koyote 8y ago
      Which is why I said 'pretty much'. In this discussion they can be regarded as the same thing.
    - icebraining 8y ago
      Yeah, but the retailer then deducts that VAT from the amount charged to the customer, so in the end it's the same, only the final customer pays VAT.
    - steve_gh 8y ago
      No. VAT is across the supply chain, provided they are all VAT registered. So as a business you only pay The net VAT between sales and purchases.
      - gok 8y ago
        Er, that's what I said/meant? This is unlike US sales tax, which is only applied at the end, and on the entire value of the sale, not the value added. Edit: Ok I see, the "you" I had in my post was confusing. VAT is charged on the value added at each point of the chain, again unlike sales/use tax.
  - spc476 8y ago
    That's fine for a local store, but what about a regional chain? Or even a national chain? What price to they advertise? Or do they need to do different advertising per tax district? (which could be city, county and/or state)
    - koyote 8y ago
      Do as the rest of the world does and include the tax in the price. Margins will obviously change between stores in different tax districts but arguably that phenomenon is already priced in today's profits: A store on the California to Oregon border has to price in the fact that their customer base could buy the same product with zero sales tax across the border.
      - spc476 8y ago
        McDonald's is offering a 99₵ burger as part of a nation wide promotion. Where I live (Florida) it's $1.06 with tax. In Oregon, it would be 99₵ (no sales tax). In North Carolina, it's $1.03 except Ashville, North Carolina has a 7% tax rate so it would be $1.07 there. What price does McDonald's advertise for their promotion?
        koyote 8y ago
        99cent. In Europe they have a 1 euro menu regardless of what country the burger was sold in (countries have different VAT rates). Some advertising is even shared between smaller countries that speak the same languages.
        kwhitefoot 8y ago
        > What price does McDonald's advertise for their promotion? I really don't care, it's their problem not mine. All I want is for stores, fast food places, etc., to be honest about the price I am to pay. In Europe, including the UK, it is illegal to advertise only tax-exclusive prices to end customers.
        tialaramex 8y ago
perl4ever 8y ago
According to the Wikipedia page on VAT in the UK[1], while there are two rates and presumably everyone there knows them, there is a long arbitrary list of which item falls into the 20%, 5%, or 0% category. For example, it says "Biscuits (chocolate covered only)" are 20%, but "Smoking cessation products" are 5%. Sales tax where I am has similar characteristics - I think most people are perfectly well aware (as I am) that it is generally 8%, but I couldn't tell you exactly which items are exempt, or what the modification is for prepared food or whatever. So I think you are exaggerating (as people like to do) the difference between the US and the UK. [1]https://en.wikipedia.org/wiki/Value-added_tax_in_the_United_Kingdom https://en.wikipedia.org/wiki/Value-added_tax_in_the_United_...
- maccard 8y ago
  Completely disagree that it's an exaggeration. If I walk into a supermarket in the UK, it doesn't matter if I know that certain goods are exempt or 5%, because the amount im going to pay is already considered on the sticker. There's no excuse for the sticker price not matching in the US.
  - perl4ever 8y ago
    Because it is listed separately, you know which rate you're paying. Isn't it good to have more information?
    - koyote 8y ago
      I am not 100% sure I get what you meant so I apologise if I misunderstood. But are you under the impression that the tax is not listed on the receipt in other countries? (it is)
    - maccard 8y ago
      My receipts show the taxes im paying. I don't think I've ever seen the tax listed separately on the sticker in the US, so ive actually got less information. Without knowing the tax rate of the area I'm in for the goods in advance, I don't know how much I'm paying
BeetleB 8y ago
>Many western countries have very simple or near-automatic tax systems and I would argue that the tax you pay is actually much more visible to residents of such countries. I think if you want to counter the poster, you need to give an example of a western country that has simple/automatic tax systems and have a lower tax rate than the US. His/her complaint is primarily that if a system is too simple, it's much easier to raise taxes. You're giving exactly the example he/she is looking for - a country where it's easy and the tax is higher.
- SparklingCotton 8y ago
  Chile has both lower taxes and automatic taxation. In 2019 they will even have automatic taxation for small businesses based on the statistical average for the industry and various signals. So basically taxation based on machine learning. You can take it or leave it - it's up to you. And this also shows that simpler taxation and higher taxation has no relation to each other.
- koyote 8y ago
  I believe that the income tax paid in California is higher than in the UK for the median household. Now correct me if I am wrong, I have only filed tax in the US for a single tax year so I might be missing something. But for the median household income in California of around $66,529, you would be paying an effective tax rate of around 24%. (using this website: https://smartasset.com/taxes/california-tax-calculator#wWyPf1PomS https://smartasset.com/taxes/california-tax-calculator#wWyPf...). And yes, I realize this is excluding deductions. In the UK, the median household income is £27,300 and you would have an effective tax rate of around 19.6% (https://www.uktaxcalculators.co.uk/ https://www.uktaxcalculators.co.uk/), also excluding deductions. Of course higher salaries attract higher taxes in the UK, but if the above is correct, then the average person should be paying less tax in the UK than in California.
  - BeetleB 8y ago
    >And yes, I realize this is excluding deductions. That's a big disclaimer. I'm not going to argue for a hypothetical. I actually ran the numbers once. My state's income tax rate is high, but lower than CA's. For my income (above median), one year I actually calculated my tax for CA (as in actually got the forms and filled them out).[0] Despite the lower tax rate, the my state's income tax was higher. The reason? CA has a lot more deductions for people of my income or lower. CA can get you in all kinds of other taxes, but not income tax. Also, just checked. Other than the deductions, for single people, you hit the second highest bracket at a little over $8K in my state. To get to that same bracket in CA, you have to earn over $50K. CA tax rates are low for lower income people. [0] It's a long story why I did this - it was not fun at all.

by koyote 8y ago

edko 8y ago

Technically, there is no VAT in the US. There is sales tax, and it can vary from city to city. I guess that is why it is not included in the price by default.

koyote 8y ago
Yep; sales tax, VAT, GST, they are all pretty much the same thing. And the fact that in the US they vary by location was what I was alluding to. > I guess that is why it is not included in the price by default I hear that argument a lot but it does not really make sense to me. The place of purchase knowns what their tax rate is in their current location because the cash register has that information (and I assume this sales tax does not change very frequently?). So why not print out or display the prices with that tax included?
- gok 8y ago
  No, they are not the same thing. You pay VAT on the value added at each part of the process. So a retailer pays VAT to their wholesaler, unlike American state sales tax systems.
  - koyote 8y ago
    Which is why I said 'pretty much'. In this discussion they can be regarded as the same thing.
  - icebraining 8y ago
    Yeah, but the retailer then deducts that VAT from the amount charged to the customer, so in the end it's the same, only the final customer pays VAT.
  - steve_gh 8y ago
    No. VAT is across the supply chain, provided they are all VAT registered. So as a business you only pay The net VAT between sales and purchases.
    - gok 8y ago
      Er, that's what I said/meant? This is unlike US sales tax, which is only applied at the end, and on the entire value of the sale, not the value added. Edit: Ok I see, the "you" I had in my post was confusing. VAT is charged on the value added at each point of the chain, again unlike sales/use tax.
- spc476 8y ago
  That's fine for a local store, but what about a regional chain? Or even a national chain? What price to they advertise? Or do they need to do different advertising per tax district? (which could be city, county and/or state)
  - koyote 8y ago
    Do as the rest of the world does and include the tax in the price. Margins will obviously change between stores in different tax districts but arguably that phenomenon is already priced in today's profits: A store on the California to Oregon border has to price in the fact that their customer base could buy the same product with zero sales tax across the border.
    - spc476 8y ago
      McDonald's is offering a 99₵ burger as part of a nation wide promotion. Where I live (Florida) it's $1.06 with tax. In Oregon, it would be 99₵ (no sales tax). In North Carolina, it's $1.03 except Ashville, North Carolina has a 7% tax rate so it would be $1.07 there. What price does McDonald's advertise for their promotion?
      - koyote 8y ago
        99cent. In Europe they have a 1 euro menu regardless of what country the burger was sold in (countries have different VAT rates). Some advertising is even shared between smaller countries that speak the same languages.
      - kwhitefoot 8y ago
        > What price does McDonald's advertise for their promotion? I really don't care, it's their problem not mine. All I want is for stores, fast food places, etc., to be honest about the price I am to pay. In Europe, including the UK, it is illegal to advertise only tax-exclusive prices to end customers.
        tialaramex 8y ago

perl4ever 8y ago

According to the Wikipedia page on VAT in the UK[1], while there are two rates and presumably everyone there knows them, there is a long arbitrary list of which item falls into the 20%, 5%, or 0% category. For example, it says "Biscuits (chocolate covered only)" are 20%, but "Smoking cessation products" are 5%. Sales tax where I am has similar characteristics - I think most people are perfectly well aware (as I am) that it is generally 8%, but I couldn't tell you exactly which items are exempt, or what the modification is for prepared food or whatever. So I think you are exaggerating (as people like to do) the difference between the US and the UK. [1]https://en.wikipedia.org/wiki/Value-added_tax_in_the_United_Kingdom https://en.wikipedia.org/wiki/Value-added_tax_in_the_United_...

maccard 8y ago
Completely disagree that it's an exaggeration. If I walk into a supermarket in the UK, it doesn't matter if I know that certain goods are exempt or 5%, because the amount im going to pay is already considered on the sticker. There's no excuse for the sticker price not matching in the US.
- perl4ever 8y ago
  Because it is listed separately, you know which rate you're paying. Isn't it good to have more information?
  - koyote 8y ago
    I am not 100% sure I get what you meant so I apologise if I misunderstood. But are you under the impression that the tax is not listed on the receipt in other countries? (it is)
  - maccard 8y ago
    My receipts show the taxes im paying. I don't think I've ever seen the tax listed separately on the sticker in the US, so ive actually got less information. Without knowing the tax rate of the area I'm in for the goods in advance, I don't know how much I'm paying

BeetleB 8y ago

>Many western countries have very simple or near-automatic tax systems and I would argue that the tax you pay is actually much more visible to residents of such countries. I think if you want to counter the poster, you need to give an example of a western country that has simple/automatic tax systems and have a lower tax rate than the US. His/her complaint is primarily that if a system is too simple, it's much easier to raise taxes. You're giving exactly the example he/she is looking for - a country where it's easy and the tax is higher.

SparklingCotton 8y ago
Chile has both lower taxes and automatic taxation. In 2019 they will even have automatic taxation for small businesses based on the statistical average for the industry and various signals. So basically taxation based on machine learning. You can take it or leave it - it's up to you. And this also shows that simpler taxation and higher taxation has no relation to each other.
koyote 8y ago
I believe that the income tax paid in California is higher than in the UK for the median household. Now correct me if I am wrong, I have only filed tax in the US for a single tax year so I might be missing something. But for the median household income in California of around $66,529, you would be paying an effective tax rate of around 24%. (using this website: https://smartasset.com/taxes/california-tax-calculator#wWyPf1PomS https://smartasset.com/taxes/california-tax-calculator#wWyPf...). And yes, I realize this is excluding deductions. In the UK, the median household income is £27,300 and you would have an effective tax rate of around 19.6% (https://www.uktaxcalculators.co.uk/ https://www.uktaxcalculators.co.uk/), also excluding deductions. Of course higher salaries attract higher taxes in the UK, but if the above is correct, then the average person should be paying less tax in the UK than in California.
- BeetleB 8y ago
  >And yes, I realize this is excluding deductions. That's a big disclaimer. I'm not going to argue for a hypothetical. I actually ran the numbers once. My state's income tax rate is high, but lower than CA's. For my income (above median), one year I actually calculated my tax for CA (as in actually got the forms and filled them out).[0] Despite the lower tax rate, the my state's income tax was higher. The reason? CA has a lot more deductions for people of my income or lower. CA can get you in all kinds of other taxes, but not income tax. Also, just checked. Other than the deductions, for single people, you hit the second highest bracket at a little over $8K in my state. To get to that same bracket in CA, you have to earn over $50K. CA tax rates are low for lower income people. [0] It's a long story why I did this - it was not fun at all.