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> But they won't. Spend it, I mean. At least not on things where VAT is relevant. If we can agree that the VAT is levied because the government has added some

> But they won't. Spend it, I mean. At least not on things where VAT is relevant. If we can agree that the VAT is levied because the government has added some value to each product sold (value added tax..) then I don't see why spending money on VAT-exempt items makes VAT a bad tax. If you spend it on labor, housing, there are taxes associated with that other than VAT. Lobbying and charities might be tax-deductible or exempt, that is another discussion. I think your point is that regressive taxes are bad, is that a fair analysis? I don't agree with that.

danaris 7y ago
I mean, I believe that regressive taxes are bad. My point, however, is merely that VAT is a regressive tax.
- itcrowd 7y ago
  I agree it is a regressive tax. Re-reading my comment I can understand that it may seem that I don't agree with that. Sorry about that. However, I fail to see why regressive taxes are bad in general and why VAT is bad in particular. I was originally interested in the question by someone else before me: > I'd be interested to hear your reasoning for why you think sales tax is so bad.
  - pmiller2 7y ago
    Regressive taxes are bad because they place a higher burden on people least able to pay versus those with more income to pay the tax.
pmiller2 7y ago
> If we can agree that the VAT is levied because the government has added some value to each product sold (value added tax.. What value has the government added to consumer products I purchase in the store, particularly in the USA where tax rates vary from state to state, county to county, or even city to city? There is no national sales tax here, but consumer regulation is still a thing, and factors into the base price of goods. I’m still genuinely interested in what value you see the government adding, but I think this might be why Americans and Europeans are disagreeing here.
- itcrowd 7y ago
  Roads, sidewalks, bridges, public transport, education (+ buildings), public libraries, emergency services, hospitals, ( ... the list goes on) are all heavily subsidized by the government here. You could design taxes such that these are all funded by the users but it is much easier to have a VAT that funds them all (at least partially). It's not like you can point to a piece of plastic on your chair and say the government made it, but the whole chair ending up inside your house was made possible, partially, by the government. I think it's fair to pay a bit for that.
  - danaris 7y ago
    The government adds value to all our lives, not merely to our consumer goods. So perhaps a more effective and fair means of paying for it is to recognize that those with higher incomes are the most financially able to support the cost, and develop a progressive income tax that ensures that the highest burdens are put on those with the greatest ability to bear them.
    - itcrowd 7y ago
      > progressive income tax European countries have this.
      - pmiller2 7y ago
        Then why do they need this VAT?
        itcrowd 7y ago
        Some costs (e.g. waste management) increase with each sold item.
        pmiller2 7y ago
        Then charge for waste management as a separate item. Call it a tax or a service charge, or whatever.
tialaramex 7y ago
That isn't why it's called Value Added Tax. It's called that because the effect of the way the tax is implemented is to tax the _addition_ of value to the product by those being taxed on its way to a consumer. Suppose I buy a vacuum cleaner from a big store nearby for $100 plus $25 VAT. I don't need to care about this, but presumably the big store bought it from a vacuum cleaner manufacturing company. Maybe they want $50. Two things could happen, the manufacturer could charge $62.50 (adding VAT) which the big store then needs to claim back because they only bought it to then sell it to me - or more likely - the two firms exchange details and both create paperwork showing that the vacuum cleaner cost $50 and no VAT was charged. We can see that either way only $12.50 of the VAT is attributable to the big store, the rest is in some sense someone else's fault, either the manufacturer or their suppliers in turn.

danaris 7y ago

I mean, I believe that regressive taxes are bad. My point, however, is merely that VAT is a regressive tax.

itcrowd 7y ago
I agree it is a regressive tax. Re-reading my comment I can understand that it may seem that I don't agree with that. Sorry about that. However, I fail to see why regressive taxes are bad in general and why VAT is bad in particular. I was originally interested in the question by someone else before me: > I'd be interested to hear your reasoning for why you think sales tax is so bad.
- pmiller2 7y ago
  Regressive taxes are bad because they place a higher burden on people least able to pay versus those with more income to pay the tax.

pmiller2 7y ago

> If we can agree that the VAT is levied because the government has added some value to each product sold (value added tax.. What value has the government added to consumer products I purchase in the store, particularly in the USA where tax rates vary from state to state, county to county, or even city to city? There is no national sales tax here, but consumer regulation is still a thing, and factors into the base price of goods. I’m still genuinely interested in what value you see the government adding, but I think this might be why Americans and Europeans are disagreeing here.

itcrowd 7y ago
Roads, sidewalks, bridges, public transport, education (+ buildings), public libraries, emergency services, hospitals, ( ... the list goes on) are all heavily subsidized by the government here. You could design taxes such that these are all funded by the users but it is much easier to have a VAT that funds them all (at least partially). It's not like you can point to a piece of plastic on your chair and say the government made it, but the whole chair ending up inside your house was made possible, partially, by the government. I think it's fair to pay a bit for that.
- danaris 7y ago
  The government adds value to all our lives, not merely to our consumer goods. So perhaps a more effective and fair means of paying for it is to recognize that those with higher incomes are the most financially able to support the cost, and develop a progressive income tax that ensures that the highest burdens are put on those with the greatest ability to bear them.
  - itcrowd 7y ago
    > progressive income tax European countries have this.
    - pmiller2 7y ago
      Then why do they need this VAT?
      - itcrowd 7y ago
        Some costs (e.g. waste management) increase with each sold item.
        pmiller2 7y ago
        Then charge for waste management as a separate item. Call it a tax or a service charge, or whatever.

tialaramex 7y ago

That isn't why it's called Value Added Tax. It's called that because the effect of the way the tax is implemented is to tax the _addition_ of value to the product by those being taxed on its way to a consumer. Suppose I buy a vacuum cleaner from a big store nearby for $100 plus $25 VAT. I don't need to care about this, but presumably the big store bought it from a vacuum cleaner manufacturing company. Maybe they want $50. Two things could happen, the manufacturer could charge $62.50 (adding VAT) which the big store then needs to claim back because they only bought it to then sell it to me - or more likely - the two firms exchange details and both create paperwork showing that the vacuum cleaner cost $50 and no VAT was charged. We can see that either way only $12.50 of the VAT is attributable to the big store, the rest is in some sense someone else's fault, either the manufacturer or their suppliers in turn.