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Please break down how a 200k Caterpillar becomes 55k more expensive for a German buyer compared to a 200k Liebherr manufactured in Germany. The US government d

by mopsi 2y ago

Please break down how a 200k Caterpillar becomes 55k more expensive for a German buyer compared to a 200k Liebherr manufactured in Germany. The US government does not charge consumption taxes on a Caterpillar exported to Germany, so both are priced at 200k before taxation in Germany. The German government charges its 19% consumption tax equally, regardless of where a bulldozer was made, so both end up costing 238k for the German buyer.

firesteelrain 2y ago
Liebherr’s bulldozer is priced at €500,000 (~$540,000 USD equivalent) in Germany. Total price paid by the U.S. consumer is $485,545 due to VAT refund. Caterpillar’s bulldozer is 22.5% more expensive in Germany than in the US. There is approximately a $109,455 price advantage for the German company in global competition
- mopsi 2y ago
  > Caterpillar’s bulldozer is 22.5% more expensive in Germany than in the US. Liebherr's bulldozer is also more expensive in Germany, because Germany taxes both sales at a higher rate than the US. Nobody gets an advantage from this. American buyer pays 7% tax and German buyer pays 19% when they purchase a bulldozer, regardless of where it came from. I made a small table to illustrate it: +-----------+------------+-----------+----------------+------------+ | Direction | Base Price | VAT (19%) | Sales Tax (7%) | Total | +-----------+------------+-----------+----------------+------------+ | US -> US | 200 000 | - | 14 000 | 214 000 | | G -> US | 200 000 | - | 14 000 | 214 000 | | G -> G | 200 000 | 38 000 | - | 238 000 | | US -> G | 200 000 | 38 000 | - | 238 000 | +-----------+------------+-----------+----------------+------------+ Tax rate differences lead to price variations across markets, but VAT does not create advantages within a single market.
  - firesteelrain 2y ago
    It does for European exporters. Sadly if this was Biden this wouldn’t even be an argument.

by mopsi 2y ago

firesteelrain 2y ago

Liebherr’s bulldozer is priced at €500,000 (~$540,000 USD equivalent) in Germany. Total price paid by the U.S. consumer is $485,545 due to VAT refund. Caterpillar’s bulldozer is 22.5% more expensive in Germany than in the US. There is approximately a $109,455 price advantage for the German company in global competition

mopsi 2y ago
> Caterpillar’s bulldozer is 22.5% more expensive in Germany than in the US. Liebherr's bulldozer is also more expensive in Germany, because Germany taxes both sales at a higher rate than the US. Nobody gets an advantage from this. American buyer pays 7% tax and German buyer pays 19% when they purchase a bulldozer, regardless of where it came from. I made a small table to illustrate it: +-----------+------------+-----------+----------------+------------+ | Direction | Base Price | VAT (19%) | Sales Tax (7%) | Total | +-----------+------------+-----------+----------------+------------+ | US -> US | 200 000 | - | 14 000 | 214 000 | | G -> US | 200 000 | - | 14 000 | 214 000 | | G -> G | 200 000 | 38 000 | - | 238 000 | | US -> G | 200 000 | 38 000 | - | 238 000 | +-----------+------------+-----------+----------------+------------+ Tax rate differences lead to price variations across markets, but VAT does not create advantages within a single market.
- firesteelrain 2y ago
  It does for European exporters. Sadly if this was Biden this wouldn’t even be an argument.