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You seem to be saying that, with VAT, the devil is in the details, not that it is necessarily bad. The fact that many countries use a VAT, and it works fine (wi
by leot 14y ago
You seem to be saying that, with VAT, the devil is in the details, not that it is necessarily bad. The fact that many countries use a VAT, and it works fine (with much higher compliance than income taxes, e.g.), suggests that it's possible to implement VATs better.
Note that a VAT works differently from a sales tax, in that the retailer is strongly motivated to comply, because they get a refund for everything they have paid for the incoming goods.
- rdl 14y agoEconomists do widely (universally?) agree that VATs have the lowest inefficiency (deadweight loss) of any form of taxation, and are thus the most efficient (not necessarily most fair, which isn't an economic question. You can solve a lot of the fairness/regressivity issues with VAT through some kind of blanket, potentially refundable per capita credit). I dislike VATs philosophically due to the massive data they collect and turn over to the government, and how they open up a lot of activities to regulation, but in practice, they do seem to be a superior option.