Obama's VAT Tax = Taxes On Our Profits on top of Income taxes?

invisible777

invisible777

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I hate taxes, I barely know how they work, and I especially hate paying taxes to a President who would rather buy toiletpaper made of silk for the bottomfeeding 30% of the country than trim all the bullshit and make this machine run more efficiently.

Anyway.

I'm researching Value Added Taxes, and from what I can see it is only for tangible, physical products and not services. Can anyone confirm? If that's the case, none of the math below matters.

But if there is no concrete proof, then: Do any of the EU nations with a VAT tax put it onto services? Ya know, services like....advertising? Cause if a "VAT" can be applied to our businesses our taxes will potentially look like one and/or both of the following in the next 2-6 years.


Example 1, taxing profit made:

$10,000 in ad spend
$14,000 in revenue
-----------------------------------------
$4,000 in profit (0.10) VAT tax = $3,600 in profit


Or

Example 2, taxing our adspend:

$10,000 in ad spend (0.10) VAT TAX = $11,000 in adspend
$14,000 in revenue
---------------------------------------------
$3,000 in profit


Or both of the above, leaving a once $4,000 in profit at $2,700 in profit. This of course doesn't factor in State and Fed income taxes, moving many people to an effective 60-80% income tax rate when all is said and done.

Again, hypothetical, but mind you the nutty lefty EU nations do utilize variant forms of a VAT tax to vacuum money out of every facet of their citizens' lives.
 


In Australia it applies to services - its actually called the Goods and Services Tax, but its basically a VAT. It was introduced by the Conservatives (Liberal Party) here about 12 years ago. Its been 10% that whole time, which is much lower than most of Europe. But then Japan is only 5%.

Its on almost everything except food.

But when it was introduced income tax and a bunch of other taxes were lowered (some removed), so it supposedly made the tax system simpler over all and people didn't end up paying more tax. I was a student back then, so can't comment from personal experience other than I got a very small pay increase in my part time retail job due to the income tax cut.

When it was introduced consumption dropped for the first 6 months. Then it went back up to exactly the same levels as a before, so there was no adverse long term effect on jobs or the economy. Supposedly the government saved a lot on the beurocracy though, because of all the small taxes that were removed. It also supposedly made paying tax easier for small businesses.

So yeah, when I work direct with Australian advertisers I charge them GST on top of the regular price. Say I get $4 a lead. When I send the invoice I'll add 40c GST on top of that. Every quarter I pay that GST to the government.
 
Basically, if you are a business it shouldn't affect you.

If your ad spend has VAT on it (second scenario), you can claim it back from the government once you've paid it.

If you are selling to customers (i.e. you aren't business to business), then your revenues will have VAT on them, but really you should pass this on to your customer (i.e. raise prices).

I think VAT would have massive inflationary effects if introduced.
 
Dispel said:
In Australia it applies to services - its actually called the Goods and Services Tax, but its basically a VAT. It was introduced by the Conservatives (Liberal Party) here about 12 years ago. Its been 10% that whole time, which is much lower than most of Europe. But then Japan is only 5%.

Its on almost everything except food.

But when it was introduced income tax and a bunch of other taxes were lowered (some removed), so it supposedly made the tax system simpler over all and people didn't end up paying more tax. I was a student back then, so can't comment from personal experience other than I got a very small pay increase in my part time retail job due to the income tax cut.

When it was introduced consumption dropped for the first 6 months. Then it went back up to exactly the same levels as a before, so there was no adverse long term effect on jobs or the economy. Supposedly the government saved a lot on the beurocracy though, because of all the small taxes that were removed. It also supposedly made paying tax easier for small businesses.

So yeah, when I work direct with Australian advertisers I charge them GST on top of the regular price. Say I get $4 a lead. When I send the invoice I'll add 40c GST on top of that. Every quarter I pay that GST to the government.
Click to expand...

That sounds awesome.


 
The amazing thing about VAT is that if you look at the tax revenues of most European governments, a VAT rate of 15-20% can actually double the tax revenues of a government.

It's an incredibly good way of hiding massive taxes.
 
LotsOfZeros said:
In before Euro VAT fanbois tell us how we need to be socially sensitive
Click to expand...

LOL

hz2v1hu310.jpg



@invisible:
The way it works in most EU countries (to my knowledge) is like this:

1) You buy something from someone
--> That company adds x% on top of their price. For them, it's pre-tax, for you it's VAT that you pay to them.

2) You sell something to someone
--> You add x% on top of your price that your client pays to you. For you, that's pre-tax, for your client it's VAT.

At the end of the year, you paid VAT, and you collected pre-tax. So you deduct what you paid from what you collected:

pre-tax collected
- VAT paid
-----------------
= remaining pre-tax that you have to pay to the government.

You do this for both goods and services. You only add pre-tax to your goods or services (VAT for the buyer) if you are a taxable entitiy like a company. Consumers don't have to do any of this obviously. As a consumer, you just pay what's on the price tag. The tax usually is included in the advertised price with a little (* VAT included) next to it.

I don't know if it will be the same for you but you asked how it works in the EU, and that's it.

PS. No need to be sensitive about it... lol. It sucks.
 
Sorry, I don't follow this enough, but... I thought the point of a VAT was to do away with income tax, and just tax consumption? If you still pay both what the fuck?
 
I'm always leery of any talk of a different tax structure just for the sheer fact that politicians who promise to get rid of one source of tax for another somehow find a way to work the new one in without removing the old one.

Nothing good EVER came out of politicians discussing any new tax no matter how they present it.

F4hTP.jpg
 
IMO:

VAT or Income Tax - pick 1



Having both is BS even at 1% VAT



.... living up to the 'Tax and Spend' rep.
 
I'm with lotsofzeros on this - existing taxes are almost never removed.

Also in the UK the VAT rate was supposed to be fixed and never increased. It's increased at least 3 times and is now about 17.5% I think (I left the UK 6 years ago).

As I recall it was supposed to "pay for the war recovery" or some such crap. Still around though.

I can pretty much guarantee you that if VAT is introduced in the US you will STILL have income taxes - just like the UK.

The real aim of VAT is to try and suck tax out of the "black" market. Even if you're working on the sly and paying no taxes directly, you end up paying taxes whenever you buy anything.

I'm a libertarian and consider all forms of "tax" to be a fancy word for theft, jus' so you know.

The idea that VAT reduces government's paperwork is great - except it increases the paperwork of the productive members of society instead. And yep, you still pay income tax.

You know, for the "services" they shove down your throat at gunpoint...



AC
 
What? VAT is the best form of tax. It doesn't tax businesses, it taxes the consumer (this is often misunderstood).

Its basically the same as income tax except everyone pays the same % of income no matter how rich you are. Instead it rewards those who save and invest instead of spend their money. Which if you agree with Hayek is a good thing.

Also its a far more right-wing form of tax than income tax, so I don't get why the fascists are moaning..

If you're above average income its better for you that Obama introduces VAT than he raises income tax.
 
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