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Originally Posted by braisler
If you remove that tax burden, the corporation could potentially bring the same product to market at a lower price point. Instead of paying $100 + 6% sales tax for a total of $106, you might pay $80 + 35% sales tax for a total of $108. Not withstanding that current sales tax is locally collected and used by the states, I think that you can see how this situation might work.
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Thanks for that example, I believe it proves my point that there's no point in doing that. In your example, the retail price of DVD player is less because the corp. didn't have to pay any taxes. However, the actual amount paid is baiscally the same (by adding a 35% VAT). Now this 35% VAT ONLY accounts for the amount of money that used to be collected directly from corporations. It doesn't touch the income tax money. It also would only apply to VAT taxable items. Therefore it would need to be even
higher to cover the income taxes that used to be collected from corps that make non-VAT taxable items.
In order to completely switch to VAT we'd also have increase the VAT more to cover that money. Also, since most people spend most of their money on non-VAT taxable items we have to make it even higher. Before you know it, we are charging over 70% on VAT items.
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Originally Posted by braisler
Further your argument that a larger sales tax would discourage consumption would be the equivalent to arguing that increasing income tax discourages people from working. If I have to pay tax on any income I have from working, then I am going to work the least I have to in order to survive. That would reduce my tax! Sounds silly? People always want things to make their lives more comfortable and pleasant. An increase in the sales tax is not going to keep your neighbor from buying that bike for his kid.
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The problem with the arguement that income tax discourages working is the fact that you need to work if you want a house, food, electricity, etc. You don't *need* to see movies and buy shit. Sure, there is welfare but that barely gives you enough to live in a shithole. Consumption is a choice that can be easily reduced.
Furthermore, what about buying a car? Say there is this $20k car. With a 70% VAT on there it's up to 34k. You have to pay interest on the VAT! Fuck that.