Quite incorrect. VAT is chargeable all the way along the chain and each company in that chain charges, and claims back, the VAT they have paid/received. Ultimately the final charge, to the consumer who isn't VAT registered, is paid and there it stops.
This is true but, conversely, you also have to pay all of the VAT you have charged your customers, which always works out at more than you claim back unless, that is, you're making a loss every quarter. In fact, if you aren't VAT registered then the chain stops at you as you cannot (as you're not VAT registered) charge your customers VAT.
Quite correct, the "Iron Lady" was also responsible for the equally well loved "Poll Tax" which managed to spark riots in London. A tax of some sort has to be levied, after all, the money has to come from somewhere. However, I also think that VAT is an indiscriminate tax, if you earn 10,000 a year it costs you 17.5% on what you buy and if you earn 100,000 a year it still costs you 17.5% on what you buy, therefore it hits people who can least afford it the most.
Pretty much the same can be said for the London "Congestion Charge", those who earn 100,000 per annum can easily afford 25GBP per week yet those who may only earn 10,000 per annum and who have to enter the zone to work are those it hits the hardest. This type of tax always affects those less well off the most.
The same thing applies to companies in the US yet they manage to charge lower prices.
For charging what the "market will bear" substitute "what we can get away with", it's old news that we've been over charged on just about everything for too long now, even EU directives to stop this have failed miserably.
Maybe they aren't too worried at the moment but I still fail to see the logic in what they do. To my mind if they reduced the profit by 33% they would probably sell twice as many products which in turn would generate more profit than they do now. A case in point is Ikea, they sell decent products at very reasonable prices and you only have to look at the check out queues, with trolleys piled high, to realise this actually works! Not only that but you do not get ripped off in the Restaurant either, decent food, reasonably priced, that's why people keep going back.
The "charge as much as possible, make more profit" philosophy is sheer folly.
Not really, as the Reagan flat tax was to be indexed to income, not to purchases like with a national sales tax of any sort - as well pointed out above, a VAT is truely an "indiscimanate" tax that specifically punishes the least able to pay by directly reducing the buying power of their income. Under a flat rated income tax, you may pay more as you make more, but you still make (and keep) more in the overall sense of things. Your buying power remains proportional to your income.
I did and would whole heartedly support a capped, flat rate income tax - if only for the savings to be had from reducing administrative requirements alone...I'd love seeing a lot of those IRS folk having to get a REAL job...
I think he was referring to my comment of a few days ago. A flat income tax is much fairer than flat "buy/usage" taxes. If simply done as witholding, you probably wouldn't really even notice it.
Mainly what they'd do is all go over to the enforcement side, since a flat income tax only works on income--capital gains will always be different, as will business taxes, excise taxes, FICA, FUTA and god only knows what else. Not one net job will be lost--but the government might put the squeeze on a lot more taxpayers. The ones who won't get squeezed are the little folks with a paycheck and not much else. Sounds okay, I guess.
Which is exactly the same as VAT only being payable on the final sale, as far as the end consumer is concerned. I think you're splitting hairs over my wording. VAT is paid only ONCE - being paid and reclaimed several times doens't matter as far as the consumer is concerned, it only matter to the retailer who has to deal with the paperwork. As you correctly say, non-VAT registered businesses cannot claim back VAT nor can they charge it. Cheers, Bill.
I don't think I explained my reasoning too well. The explanation above makes it appear as if it is the same charge all the way through the process, which of course it isn't. If I sell a part to you, plus VAT, I then pay that VAT to C&E. You then sell on that part, at a profit, to another supplier and you, in turn, pay the VAT you have charged to the C&E, which is greater than the original sum as you have made a profit on the item. The next company then sells the part on, again at a profit, and so the original VAT is yet again paid with a little more added on. Finally, it reaches the consumer who pays VAT on the whole of the sum of the totals.
At each part of the "chain" the C&E rake in a little more tax so, as you can see, the tax is not paid once, but many times. The only way the tax could be paid once is if every company in the 'chain' was a non-profit making organisation, which of course they aren't. You must always pay the C&E more in VAT than you reclaim otherwise you're making a loss, therefore every company/individual in the chain, that is VAT registered, pay the Gov more than they claim back, and at each stage of the process the Gov take in a little more than the previous time.
So, if you look at it logically, the tax isn't payable only once but many times, as the cost increases, it is a clever tax, as the Gov takes a bite out of each transaction and then finally saddles the consumer with the bulk of it.
That's one of the problems with the current system. If people had to send in a check every month they might realize just how much they're really paying in federal income taxes.....
Speaking of cap-gains, I'm increasingly baffled by why noone has picked up on the fact that in the light of 401K's, mutual mutual funds, etc. and the trend towards self-sufficient retirement that cap-gains taxes are not just for "rich guys" any more as a campain issue...they'll impact anyone with a post-modern retirement plan...which is now a significant portion of the population. At least that the way I see it in the USA.
I'd still support a capped, flat rate income tax if the goal was also to eliminate all of the others that you so rightly mention in the process.
I agree. Not to mention that in a case like yours (or possibly mine, in the future...) I could see it beeing hard to sort gains from straight income...especially in the case where taxes on portions have been deferred. And I absolutely HATE the idea of having to pay someone to watch/manage MY money just to deal with the sitch.
You're the exception rather than the rule. Most people when asked how much they make will tell you what their net pay is. They don't have any idea how much federal income tax they pay - all they're interested in is how big their 'refund' is.
And don't even try to convince them they're giving the government an interest-free loan all year long.....
Funny...I know more about how much tax I pay than what my base salary is...I've been living "on travel" for so long I have no idea what my base is. I get location offsets, which are taxable - so my year end gross is always higher than my base by about 12%. I think...
But I do know that I pay more in taxes than most teachers make in a year.
My last wage net was approx. 36.8K, should have been 34.6K but I had a few extra deductions that year. I normally vary year to years between getting $200 or so back and paying an extra $200 or so, depends on deductions like medical and sometimes capital gains from stock options as bonuses. That was wage based info......now that we're living off investements for awhile capital gains is a whole 'nother kettle of fish and I only vaguely understand it....so far.
I know the > You're the exception rather than the rule. Most people when
I'm real aware every time I look at a pay stub. I'd much rather pay income tax than sales tax or road tolls, but I don't think we get a choice. Unless I move to Oregon.
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