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A: "You have selected Amazon's Prime Fire service" A: "A fire-engine will be dispatched within 20 minutes" --- In another part of the country --- A: "We're s

A: "You have selected Amazon's Prime Fire service" A: "A fire-engine will be dispatched within 20 minutes" --- In another part of the country --- A: "We're sorry we don't provide Prime fire service for your location, please direct your query to the local authorities" Local fire department: "We will try and answer your call as soon as possible, but due to budget cuts from a reduced corporate tax income we have had to reduce our services in the area."

rayiner 7y ago
Corporate tax is a red herring. Across the OECD, it makes up just 9% of tax revenue (just 6% in Sweden and Denmark). The US is about the same (8%). If you want to complain about tax revenue, point to the fact that Americans don’t pay VAT (like everyone in Europe does) on all the cheap crap they buy on Amazon. Or in the case of California, complain about Prop 13 limiting the property taxes people pay on McMansions. (Which, after all, are what pay for your local government functions like fire service.)
- loceng 7y ago
  POTUS candidate Andrew Yang's foundation for his #1 policy/solution is a 10% VAT tax. Edit: Curious why facts are downvoted? Does HN not like discussing solutions and people actively working on solutions?
  - erfderd 7y ago
    I'm not against sales tax; there are many benefits to it. However A 10% sales tax is a 10% tax on poor people's disposable income since they have almost no savings. How do we square that regressive circle?
    - MayorMonty 7y ago
      In Yang's case, the 10% VAT is accompanied by a $1000/month Universal Basic Income.
      - erfderd 7y ago
        That should eliminate all the income from the VAT and then some, so the firefighters are still dropping your calls. $ 1000/adultmonth = $ 12 000 / adultyear. -> requires $120 000 of disposable income spent per adult. Very few people spend $120 000 of VATable (A family making $300 000, a good income, doesn't spend anywhere near $120 000)
        jasonlotito 7y ago
        This assume everything is taxed under VAT. As Yang has discussed, necessities don't need to be taxed. Luxury items can have a higher tax.
    - arethuza 7y ago
      In the UK at least a lot of "basic" things are exempt from VAT, although the rules are quite complex: https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services https://www.gov.uk/guidance/rates-of-vat-on-different-goods-...
    - rayiner 7y ago
      In Europe they largely don’t try to square the circle, aside from maybe exempting necessities like food. They offer efficient, high quality welfare services to low income people in return for those taxes. (Of course, low income people get much more in services than they pay in VAT.)
      - patentatt 7y ago
        But they do, in a way, by using those increased revenues to fund a comprehensive social safety net. If you just add VAT in the US, yeah it would be a disaster.
  - palisade 7y ago
    I almost never weigh in on political stuff. But, F* that. Do you want to be able to never afford anything? Because, that's a good start. What we really need to do is balance the budget by cutting back on the quantity and expensiveness of existing programs. The government needs to optimize. We are spending too much. Which are dirty words no one wants to hear or perform.
    - patentatt 7y ago
      You’re right that VAT is regressive and the middle class would bear the brunt of it, but I encourage you to consider other ways to address the issue. “Cutting spending“ is almost always code for “cutting spending on stuff the middle class and poor need,” which only pits workers against workers. Rather than die in a circular firing squad, how else could the shortfall be explained? Look into stagnant wages, wealth inequality, and ask where all the productivity gains of the computing revolution have gone.
      - godshatter 7y ago
        Not the parent poster, but we should probably start with our biggest outlays, and work down from there. I'm assuming that's military spending and entitlement programs. If I'm wrong, we can start with whatever the two largest outlays actually are.
        jdhn 7y ago
        I believe that Medicaid, Medicare, and Social Security make up close to 50% of the government's budget. Put military spending in there, and I'd be surprised if it didn't go over 75%.
        rayiner 7y ago
        Note that at all levels of government, spending is close to $7 trillion annually, with only $4 trillion from the federal government. Medicare and SS are together about $1.5 trillion. Defense is about $700 billion. Roads, education, schools, etc., make up most of the $3 trillion state spending.
- erfderd 7y ago
  We pay sales tax. What's so special about VAT vs. sales tax? Unless you are arguing for a federal sales tax, which OK sure federal tax is great, except it doesn't pay for local services. Also, now you also have to argue about the regressive nature of sales tax in general.
  - Shivetya 7y ago
    One is embedded so you do not easily identify just how much all those free services cost you. embedded taxes benefit the tax man and the easiest to make regressive thereby clawing back much of the money spent on services
    - erfderd 7y ago
      Ya, Canada used to have a VAT like tax, and then got rid of it in the 90s. My question was honest though. Is there something special (good) about VAT vs. sales tax that I'm missing? Because the OP implied we don't pay sales tax in the US, which is (generally) not true.
  - rayiner 7y ago
    VAT is somewhat different in mechanics from sales tax, because it is collected along different points in the value chain. More important, VAT in Europe typically ranges from 20-25%, and has a broader tax base. In a typical European country, consumption taxes make up almost 30% of revenue, versus 17% in the US.
    - erfderd 7y ago
      So you're arguing for an increase of our sales tax. That's different than saying we don't pay sales tax! Now, I don't disagree that a mechanism that tames American consumption would be good, and is also counter cycle to the economy. But the question remains unanswered: How about the effect of sales tax on people and families at the margins [0]? 20-25% sales tax is a lot for them. A sales tax rebate check at the end of the year like Canada does? $70 hardly covers the bite of the sales tax! [0] Including my in-laws, so I'll admit this is a bit personal.
- _visgean 7y ago
  I am looking into https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates and i dont see the numbers you mentioned.
  - rayiner 7y ago
    Those are rates, not revenue. The OECD has profiles that show how much of each country’s tax revenue comes from different sources. For example Sweden: https://www.oecd.org/tax/revenue-statistics-sweden.pdf https://www.oecd.org/tax/revenue-statistics-sweden.pdf
- patentatt 7y ago
  VAT tax is regressive: https://www.taxpolicycenter.org/briefing-book/who-would-bear-burden-vat https://www.taxpolicycenter.org/briefing-book/who-would-bear...
  - tomp 7y ago
    from your link > Exempting, zero rating, or excluding certain essential consumption goods from the tax base (e.g., foodstuffs, medicine, health care) can reduce the regressivity of a VAT. That's what's done in Europe.
    - sgc 7y ago
      It certainly does not eliminate it, and almost every EU country has only a lower VAT, not none, on some or all these items. https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf https://ec.europa.eu/taxation_customs/sites/taxation/files/r...
    - pluma 7y ago
      Germany has a reduced rate for certain goods but in practice it is pretty arbitrary and mostly the result of lobbying. Note that even if it were applied entirely consistently and without bias it would still only reduce the regressivity, it wouldn't make it non-regressive. If a person with low income buys a gallon of milk they pay the same VAT on it as a person with high income would. If they buy cheap off-brand cheese they pay the same VAT rate as they would pay for expensive luxury cheese (except they likely can't afford the latter). VAT doesn't account for income inequality, it just makes everything more expensive for everyone. Income tax OTOH impacts high income households more than those with low income. At least in theory: in practice income tax (especially in the US) has massively gone down for high income households, again just affecting everyone equally like VAT does.
- dghughes 7y ago
  It's called Goods and Services Tax (GST) in Canada. There was confusion when it was first implemented over what was or wasn't taxed. For example a muffin wouldn't be taxed but that same muffin if heated would be taxed. My province was really raking it in. We paid a 10% provincial ("state") tax and then the GST on top of that tax. Yes a tax on a tax.
- jahaja 7y ago
  I think it's important to note that most western countries have gone through a neoliberal regime of tax cuts since ~1970. For example the corporate tax in Sweden was 52% in 1980 (albeit with generous deductions for various kinds of investments).
  - deleted 7y ago
    [deleted]
  - Ottolay 7y ago
    Yet Europe still does a way better job than the US in affordable education, universal healthcare, and environmental policy.
    - jahaja 7y ago
      The US sets a very low standard. The downfall of the wellfare state in Sweden is very obvious.
- Retric 7y ago
  Corporate taxes are low in most countries today, but they used to be a huge source of revenue in the US: https://www.taxpolicycenter.org/statistics/corporate-income-tax-share-gdp-1946-2018 https://www.taxpolicycenter.org/statistics/corporate-income-... The advantage of corporate taxes is they collect money from foreign investors which would otherwise leave the US. Lowering corporate taxes requires increases US taxes so it can lower them for foreign wealth funds etc.
  - anonuser123456 7y ago
    Well, if those foreigners aren't using our services why are we taxing them?
    - Retric 7y ago
      The companies are using our services, which indirectly benefits these investors. Media companies for example benefit from US enforcement of copyright law. Similarly enforcement of contracts and private property, plus all the little things that allow the US to be such a prosperous society.
    - unclesams-uncle 7y ago
      Because the US can. The US capital markets are still the best in the world. Investors put their money into the US market because the returns are better than in most places and the US legal system protects investors. The US withholds 30% of all dividend payments to foreign investors (although tax treaties can effectively reduce this amount). They can do this because there's enough foreign demand for US stocks. When the day comes that the US is no longer the most attractive place for stock market investors, then perhaps the US will look at changing the withholding tax to bring in more capital.
- C1sc0cat 7y ago
  They pay sales tax at the state and some times city level which is effectively VAT
rgrieselhuber 7y ago
"Hey man, it's a free market! If you don't like, start your own competitor."
rubidium 7y ago
Interesting thing I just found out about Bird scooters. They will allow you to drive into some neighborhoods, but can't be activated from that neighborhood. The neighborhoods you can't activate one from? Poor ones. If anyone has more info on this apparently discriminatory action I'd love to chat more.

rayiner 7y ago

Corporate tax is a red herring. Across the OECD, it makes up just 9% of tax revenue (just 6% in Sweden and Denmark). The US is about the same (8%). If you want to complain about tax revenue, point to the fact that Americans don’t pay VAT (like everyone in Europe does) on all the cheap crap they buy on Amazon. Or in the case of California, complain about Prop 13 limiting the property taxes people pay on McMansions. (Which, after all, are what pay for your local government functions like fire service.)

loceng 7y ago
POTUS candidate Andrew Yang's foundation for his #1 policy/solution is a 10% VAT tax. Edit: Curious why facts are downvoted? Does HN not like discussing solutions and people actively working on solutions?
- erfderd 7y ago
  I'm not against sales tax; there are many benefits to it. However A 10% sales tax is a 10% tax on poor people's disposable income since they have almost no savings. How do we square that regressive circle?
  - MayorMonty 7y ago
    In Yang's case, the 10% VAT is accompanied by a $1000/month Universal Basic Income.
    - erfderd 7y ago
      That should eliminate all the income from the VAT and then some, so the firefighters are still dropping your calls. $ 1000/adultmonth = $ 12 000 / adultyear. -> requires $120 000 of disposable income spent per adult. Very few people spend $120 000 of VATable (A family making $300 000, a good income, doesn't spend anywhere near $120 000)
      - jasonlotito 7y ago
        This assume everything is taxed under VAT. As Yang has discussed, necessities don't need to be taxed. Luxury items can have a higher tax.
  - arethuza 7y ago
    In the UK at least a lot of "basic" things are exempt from VAT, although the rules are quite complex: https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services https://www.gov.uk/guidance/rates-of-vat-on-different-goods-...
  - rayiner 7y ago
    In Europe they largely don’t try to square the circle, aside from maybe exempting necessities like food. They offer efficient, high quality welfare services to low income people in return for those taxes. (Of course, low income people get much more in services than they pay in VAT.)
    - patentatt 7y ago
      But they do, in a way, by using those increased revenues to fund a comprehensive social safety net. If you just add VAT in the US, yeah it would be a disaster.
- palisade 7y ago
  I almost never weigh in on political stuff. But, F* that. Do you want to be able to never afford anything? Because, that's a good start. What we really need to do is balance the budget by cutting back on the quantity and expensiveness of existing programs. The government needs to optimize. We are spending too much. Which are dirty words no one wants to hear or perform.
  - patentatt 7y ago
    You’re right that VAT is regressive and the middle class would bear the brunt of it, but I encourage you to consider other ways to address the issue. “Cutting spending“ is almost always code for “cutting spending on stuff the middle class and poor need,” which only pits workers against workers. Rather than die in a circular firing squad, how else could the shortfall be explained? Look into stagnant wages, wealth inequality, and ask where all the productivity gains of the computing revolution have gone.
    - godshatter 7y ago
      Not the parent poster, but we should probably start with our biggest outlays, and work down from there. I'm assuming that's military spending and entitlement programs. If I'm wrong, we can start with whatever the two largest outlays actually are.
      - jdhn 7y ago
        I believe that Medicaid, Medicare, and Social Security make up close to 50% of the government's budget. Put military spending in there, and I'd be surprised if it didn't go over 75%.
        rayiner 7y ago
        Note that at all levels of government, spending is close to $7 trillion annually, with only $4 trillion from the federal government. Medicare and SS are together about $1.5 trillion. Defense is about $700 billion. Roads, education, schools, etc., make up most of the $3 trillion state spending.
erfderd 7y ago
We pay sales tax. What's so special about VAT vs. sales tax? Unless you are arguing for a federal sales tax, which OK sure federal tax is great, except it doesn't pay for local services. Also, now you also have to argue about the regressive nature of sales tax in general.
- Shivetya 7y ago
  One is embedded so you do not easily identify just how much all those free services cost you. embedded taxes benefit the tax man and the easiest to make regressive thereby clawing back much of the money spent on services
  - erfderd 7y ago
    Ya, Canada used to have a VAT like tax, and then got rid of it in the 90s. My question was honest though. Is there something special (good) about VAT vs. sales tax that I'm missing? Because the OP implied we don't pay sales tax in the US, which is (generally) not true.
- rayiner 7y ago
  VAT is somewhat different in mechanics from sales tax, because it is collected along different points in the value chain. More important, VAT in Europe typically ranges from 20-25%, and has a broader tax base. In a typical European country, consumption taxes make up almost 30% of revenue, versus 17% in the US.
  - erfderd 7y ago
    So you're arguing for an increase of our sales tax. That's different than saying we don't pay sales tax! Now, I don't disagree that a mechanism that tames American consumption would be good, and is also counter cycle to the economy. But the question remains unanswered: How about the effect of sales tax on people and families at the margins [0]? 20-25% sales tax is a lot for them. A sales tax rebate check at the end of the year like Canada does? $70 hardly covers the bite of the sales tax! [0] Including my in-laws, so I'll admit this is a bit personal.
_visgean 7y ago
I am looking into https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates and i dont see the numbers you mentioned.
- rayiner 7y ago
  Those are rates, not revenue. The OECD has profiles that show how much of each country’s tax revenue comes from different sources. For example Sweden: https://www.oecd.org/tax/revenue-statistics-sweden.pdf https://www.oecd.org/tax/revenue-statistics-sweden.pdf
patentatt 7y ago
VAT tax is regressive: https://www.taxpolicycenter.org/briefing-book/who-would-bear-burden-vat https://www.taxpolicycenter.org/briefing-book/who-would-bear...
- tomp 7y ago
  from your link > Exempting, zero rating, or excluding certain essential consumption goods from the tax base (e.g., foodstuffs, medicine, health care) can reduce the regressivity of a VAT. That's what's done in Europe.
  - sgc 7y ago
    It certainly does not eliminate it, and almost every EU country has only a lower VAT, not none, on some or all these items. https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf https://ec.europa.eu/taxation_customs/sites/taxation/files/r...
  - pluma 7y ago
    Germany has a reduced rate for certain goods but in practice it is pretty arbitrary and mostly the result of lobbying. Note that even if it were applied entirely consistently and without bias it would still only reduce the regressivity, it wouldn't make it non-regressive. If a person with low income buys a gallon of milk they pay the same VAT on it as a person with high income would. If they buy cheap off-brand cheese they pay the same VAT rate as they would pay for expensive luxury cheese (except they likely can't afford the latter). VAT doesn't account for income inequality, it just makes everything more expensive for everyone. Income tax OTOH impacts high income households more than those with low income. At least in theory: in practice income tax (especially in the US) has massively gone down for high income households, again just affecting everyone equally like VAT does.
dghughes 7y ago
It's called Goods and Services Tax (GST) in Canada. There was confusion when it was first implemented over what was or wasn't taxed. For example a muffin wouldn't be taxed but that same muffin if heated would be taxed. My province was really raking it in. We paid a 10% provincial ("state") tax and then the GST on top of that tax. Yes a tax on a tax.
jahaja 7y ago
I think it's important to note that most western countries have gone through a neoliberal regime of tax cuts since ~1970. For example the corporate tax in Sweden was 52% in 1980 (albeit with generous deductions for various kinds of investments).
- deleted 7y ago
  [deleted]
- Ottolay 7y ago
  Yet Europe still does a way better job than the US in affordable education, universal healthcare, and environmental policy.
  - jahaja 7y ago
    The US sets a very low standard. The downfall of the wellfare state in Sweden is very obvious.
Retric 7y ago
Corporate taxes are low in most countries today, but they used to be a huge source of revenue in the US: https://www.taxpolicycenter.org/statistics/corporate-income-tax-share-gdp-1946-2018 https://www.taxpolicycenter.org/statistics/corporate-income-... The advantage of corporate taxes is they collect money from foreign investors which would otherwise leave the US. Lowering corporate taxes requires increases US taxes so it can lower them for foreign wealth funds etc.
- anonuser123456 7y ago
  Well, if those foreigners aren't using our services why are we taxing them?
  - Retric 7y ago
    The companies are using our services, which indirectly benefits these investors. Media companies for example benefit from US enforcement of copyright law. Similarly enforcement of contracts and private property, plus all the little things that allow the US to be such a prosperous society.
  - unclesams-uncle 7y ago
    Because the US can. The US capital markets are still the best in the world. Investors put their money into the US market because the returns are better than in most places and the US legal system protects investors. The US withholds 30% of all dividend payments to foreign investors (although tax treaties can effectively reduce this amount). They can do this because there's enough foreign demand for US stocks. When the day comes that the US is no longer the most attractive place for stock market investors, then perhaps the US will look at changing the withholding tax to bring in more capital.
C1sc0cat 7y ago
They pay sales tax at the state and some times city level which is effectively VAT

rgrieselhuber 7y ago

"Hey man, it's a free market! If you don't like, start your own competitor."

rubidium 7y ago

Interesting thing I just found out about Bird scooters. They will allow you to drive into some neighborhoods, but can't be activated from that neighborhood. The neighborhoods you can't activate one from? Poor ones. If anyone has more info on this apparently discriminatory action I'd love to chat more.