2012 GOP Platform Ties VAT Tax to Income Tax Repeal

2012 GOP Platform Ties VAT Tax to Income Tax Repeal

The Republicans are saying a Value Added Tax is OK as long as the Income Tax laws are repealed !!

A VAT is generally like a sales tax on everything, but can get complicated.

I would think not as complicated as the IRS however.

Some countries have VATs as high as 20%.

(CNSNews.com) – The 2012 Republican Party platform states that the party would accept a value-added tax (VAT) or other consumption-based tax only if the 16th Amendment authorizing the federal income tax were repealed.

“In any restructuring of federal taxation, to guard against hypertaxation of the American people, any value added tax or national sales tax must be tied to the simultaneous repeal of the Sixteenth Amendment, which established the federal income tax,” the platform says.

The section mentioning the VAT or national sales tax is a holdover from the 2008 platform, which included nearly identical language premising a national consumption tax to the repeal of the 16th Amendment.......
2012 GOP Platform Ties VAT Tax to Income Tax Repeal

wikipedia

A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.

The value added to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.
Value Added Tax

I wonder if a VAT would bring in as much revenue ?

Any examples from other countries ?


Maybe this could reduce the business expenses connected with employee income taxes,

Maybe this creates jobs ?

Pros & Cons ?

Sure, makes sense. Tax consumption. That is sure to stimulate an economy that is allegedly driven by mass consumerism. The people that would be most hurt by an across-the-board VAT are those in the very lowest economic deciles. Face it, you HAVE to consume to sustain yourself and your family so a 20% VAT (for example) would lower the income of the poor by 20%. Keep in mind, the lowest economic deciles do not pay income tax.

sounds good to me.

except no tax on food.

democrats would hate this, because everyone would pay not just those who work.

Only one hole in this theory, people have to have income to be able to spend money to be taxed.

reply to post by ctdannyd


Another

The rich will just buy stuff from over seas where no VAT is applied - as they can afford to do it

Vat is a type of tax that is impossible to totally evade. It is generally only used for incredibly high tax rates. At these rates, everyone starts attempting to evade it. Vat would still be possible to partially evade, but its a tax on "value added"...

So theyre up to something. why?

reply to post by bjax9er


I'm not a Democrat but I believe it puts a significant burden on the poor. It seems like some people believe that those struggling to survive economically just need to 'get a job'. I get the sense that some people believe people are only poor cause they're either lazy, they want to be poor or they are scamming 'the system'. What sense does it make to tax someone already on the financial brink forcing them to seek-out even more government support in order to survive? Just so taxpayers can feel better cause 'at least they're paying their fair share'? That's moronic. If someone is scraping-by earning $16,000/yr, a 20% VAT would push that household below the poverty line.

No matter what tax system we use in this country it has to provide for breathing room for the basics or we are simply creating problems for ourselves.

Investopedia explains 'Poverty Trap'

In order to escape the poverty trap, it is argued that individuals in poverty must be given sufficient aid so that they can acquire the critical mass of capital necessary to raise themselves out of poverty. This theory of poverty helps to explain why certain aid programs which do not provide a high enough level of support may be ineffective at raising individuals from poverty. If those in poverty do not acquire the critical mass of capital, then they will simply remain dependent on aid indefinitely and regress if aid is ended.

Save your stories about plasma TV owning, cellphone wielding baby factories. Sure, there are lots of people who game the system (on both ends of the economic spectrum I might remind you) but enforcing a tax on the poor isn't going to fix that and certinaly won't contribute anything to fixing the problems facing this country.

Originally posted by Neocrusader
reply to post by ctdannyd

 

Another

The rich will just buy stuff from over seas where no VAT is applied - as they can afford to do it

Youre still required to pay taxes on overseas shipments. Ever send one? European people will often try to get you to lie and say the package is a gift they didnt pay for, or get you to lie about the value. They make them pay it to get the package iirc. Whereas here in the us, no one cares because we dont have federal taxes on money spent...and the states dont have a lot of control over their borders.

reply to post by jtma508


I agree. Thats why people making less than 13000 or so pay no taxes. That number is too low honesfly

Not that its fair for "rich" people like myself to pay 500 a week in taxes either.

I think that if there is a VAT tax, combined with income tax repeal then we will all come out (exempting taxes on food stuffs) better. For one, we will have a clear pay as you go tax instead of it being a guessing game at the end of the year. Also, I think that if goods have a higher tax on them then you might reconsider buying something so frivously and instead save your money for something that you really do need or invest it wisely. The only problem with a VAT tax is that Congress has the ability to raise it whenever they want which would kill the economy. Just imagine, no income tax but a 10% tax on all the goods you buy. It would be great if it stays at 10% but when it gets above 15% federal tax then you will have a problem (remember, you have state and often city taxes added on as well).

reply to post by dizzie56


Forgive me if I'm wrong, but isn't one of the fundamental problems with the economy right now the fact that consumers are not spending? By your own description the VAT concept will tend to squash consumerism by causing people to 'reconsider spending on some frivolous'. It's these collective 'frivolous' spends that make the economy. No return to consumption ==> no jobs ==> dimisnished tax revenue.

reply to post by jtma508


It will return to an investment-driven economy. Money is an illusion.

reply to post by RELDDIR


Return to? Isn't the reason we're currently in the toilet is precisely BECAUSE we've evolved INTO an investment-driven economy? Rather than produce anything we're simply creating massive 'asset pools' that do nothing. They don't create jobs. They don't create consumables. And 90+% of all investments are controlled by roughly 10% of the population. So am I to believe that this is just another scheme to enrich the 10% at the expense of the 90%?

reply to post by jtma508


If you say so.

reply to post by jtma508


investment => profit => consumption (that's what drives economies, not the other way around)

HA HA!

The Republicans have said for some time that the VAT tax is a bad idea and only a "socialists" like Obama would consider it!

Many of our fellow members on ATS lambasted the Dems when they talked about it......now the GOP is considering it?

Hypocrites!

reply to post by RELDDIR


Really? Back that statement up. The vast majortity of people own no or very minimal investment products (e.g., small IRAs). How exactly do the profits associated with investments held by a minority of people drive wide-scale consumerism? How do those profits find their way into the nads of the American consumer? I think your concept is baseless. I'll say it again, one of the biggest problems with the economy at the moment is the significantly slowed velocity of money. It has been accumulated at an unprecedented rate into an increasingly smaller part of the population. It is languishing in stagnant asset pools. Only when money moves around (which it is not - Google M2) does the economy benefit. The M2 has tanked since the the Wall Street Ass Hats pooched the economy. I don't think you have a clue what you are talking about.

This is likely a precourser to the FAIR tax initative. Which in essence repeals the income tax and adds a sales tax to the end product. The difference between this and a VAT tax is that a current VAT tax would be added on after all sales taxes from the manufacture, the wholesaler, and the dealer of a product have already paid taxes. This would hurt the middle and lower classes as it would currently be appllied since the regular tax code would still be inforce. Some Dems have talked about a VAT tax, but that's on top of everything else we pay.

BUT.......

It would help everyone if the sales tax was added as the ONLY tax down the whole production/sales path has taken it's course.

Also under fair tax a family of 4 would get a monthly rebate of about 1200 bucks. This would be to cover the taxes on "nessecitites" like food and medicine.

There have been several studies on the FAIR tax, and most agree it would pretty much fix the us economic problems. It also has been proposed in a bill I beleive, but never got out of committee. It's a bit too radical for most people, but I t hink it is the CHANGE that is needed to right the ship.

Here is the Wiki article. i would suggest everyone read it.

en.wikipedia.org...

Herman Cain's 9-9-9 tax was a precouser to the FAIR tax. I beleive Ron Paul has looked at it extensively. I think everyone should at least become aware. Read the article.


EDIT...it did some checking the prebates are a little less than I thought, about $850 for a family of 4). But still significant savings. I again suggest reading the above wiki article to get a real handle on both the pro's and cons of this idea.

I tend to think VATs won't work as Gov't wants more & more & more. That the VAT will be introduced as a great thing, but they just wait to nail us. Lemme show you...

Simple math... say you make $50k now, you're clearing what $35k net now and let's assume you have $12k a year food/clothing budget, you save $12k a year, that leaves you $11k from mad money to spend and you do.

Now with a VAT, you're making the full $50k, you're spending $12k for food/clothing & saving the $12k, so that leaves you $26k to blow rather than $11k in the first example and you spend all $26k. Just for the VAT to collect the same amount as the current tax it would need to be 57%. Even if a 25% VAT was on everything the amount brought in via the VAT compared to the payroll tax would be less.

Math - $15k tax paid first example,
$38k x .25% = $9.5k all purchases w VAT
$26k x .25% = $6.5k for luxuries w VAT.

You'll end up buying less gear as more $ will be going towards taxes, so what happens then? The Gov't screams the "I'm broke" blues and re-introduces income tax w/o dropping the VAT. Slowly they'll raise both and we'll be screwed sideways w/o the benefit of lube.

Yes that is crazily simple, I'm doing this from work--don't nark me out, but we'll get it 12 ways from Sunday once the VAT is added.

Derek

Originally posted by sheepslayer247
HA HA!

The Republicans have said for some time that the VAT tax is a bad idea and only a "socialists" like Obama would consider it!

Many of our fellow members on ATS lambasted the Dems when they talked about it......now the GOP is considering it?

Hypocrites!

edit on 30-8-2012 by sheepslayer247 because: (no reason given)

Um, this has been a part of the GOP platform for years. Talk out your a** much?