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First, because VATs are regressive. Imagine Alice has an income of, say, USD 50k. She's going to spend a big chunk of that on goods and services: housing, food,
by donw 6y ago
First, because VATs are regressive. Imagine Alice has an income of, say, USD 50k. She's going to spend a big chunk of that on goods and services: housing, food, etc.
Bob, on the other hand, makes USD 500k. He spends maybe twice as much as Alice does -- nicer house, flash car, all that. Bob can save and invest far more than Alice with a VAT.
Second, because our governance problems are not because of a lack of money.
The US has horrible schooling, in spite of being the 4th-highest spender on secondary education in the world, yet we rank in the same cohort as Latvia. I promise you they don't spend like we do on education.
The US has a cultural problem. Part of which is throwing money at problems without actually fixing them.
- alejohausner 6y agoCanada has federal and provincial VATs. They are not regressive, because low income people get a tax refund, quarterly. VATs are good.
- donw 6y agoIf we replaced existing taxes with VATs, and did a prebate (e.g., Yang's proposal), that'd be a lot more palatable. Although I'd be curious what this would do to housing prices -- e.g., if you buy a house, is a VAT applied to your purchase price?
- tptacek 6y agoCountries with VATs seem to tend to exempt residential real estate.
- donavanm 6y agoAs an aside there are murmurs here in Australia, particularly NSW, about moving from property stamp duties to annual property or land taxes. Principal residences are currently exempt from the 1.6% annual land tax.