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Well as per the other points, VAT isn't actually a corporate tax that actually works - Firstly because it is a tax on consumer prices rather than corporate prof
by Closi 3y ago
Well as per the other points, VAT isn't actually a corporate tax that actually works - Firstly because it is a tax on consumer prices rather than corporate profits or revenue.
If you were a highly profitable oil drilling company, or were in the business of mineral extraction, or were an investment bank for instance, you would not be taxed at all under a 'VAT only' system.
IMO we might as well just say 'don't tax companies' - VAT isn't a substitute for a corporation tax, because it's not a tax on corporations (it's a tax on consumer purchases').
- codexb 3y agoAll taxes are ultimately born by the consumer. All. Of. Them. It doesn't matter how much you try and obfuscate the tax by introducing it at different points in the supply chain. If you charge a tax anywhere in the supply chain, suppliers will just increase prices and pass that cost onto the consumer.
- Closi 3y agoNot really true - a corporate capital gains tax for instance is generally born by a companies shareholders rather than the companies consumers, so it's clear that some taxes can be directed more towards company shareholders than consumers. Similarly dividend taxes don't really put much upwards pressure on consumer prices. So the idea of corporation tax is to try and structure a tax which puts pressure on corporate profits on very profitable businesses, rather than putting direct pressure on prices. I mean it depends who you call a 'consumer' as ultimately someone has to pay, but the idea is to direct that to the richer capital-owners rather than the poorer, and VAT generally hits the poorer.
- onlyrealcuzzo 3y agoYou can definitely distort behavior with taxes.