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Do we need a VAT?

Deacon923

Deacon923

Scooter Banks
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I have been thinking on this for a while since I read these two articles:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/05/the-government-is-the-only-reason-u-s-inequality-is-so-high/

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/19/other-countries-dont-have-a-47/

Taken together, we see that the US has the most progressive tax scheme across peer countries, but does the least with those tax revenues to reduce inequality.[SUP]1[/SUP]

Then I read this piece today, which among many other things, mentions how the same forces of globalization are affecting Europe, but they are able to limit inequality and improve social mobility by social spending - so that the net effect of their government spending is much more progressive than ours. http://www.theatlantic.com/politics/archive/2014/02/the-end-of-american-exceptionalism/283540/ VATs are regressive - that is not arguable and is shown in the data I posted - but the governments then turn around and spend that VAT money to support and lift up the poorer segments of their population, so the net effect is not regressive.

What I have been thinking is "why is it so politically impossible in the US to do something about these problems?" It occurs to me that so much of the rhetoric I hear against spending on the poor is centered on the perception that the government is robbing the makers and paying the takers, and that the poor are not contributing to society so why should society help them. High income people that I know complain vociferously about all that money that gets taken out of their checks every month.

I wonder if part of the reason things are different in other nations is because they have VATs. In those countries, everyone is paying their "fair share" because of the consumption tax. Maybe there is less of a perception among the rich that the poor are taking them for a ride, because they know the poor are paying in too.

Maybe liberals in this country would be better served if they lowered their objection to consumption taxes, and traded their political assent to higher consumption taxes/lower income taxes in exchange for higher levels of spending and more solid programs for the poor.

[SUP]1[/SUP]I note that none of these countries are pulling the weight of being global cop, they spend far less as a percentage of GDP on their militaries. That is a different discussion but I think it does play into how our peer countries are able to afford their social programs - some of it is because the American taxpayer is pulling all the weight of scaring the Russians and keeping the sea lanes open.
 
I think a consumption tax would be better than a VAT.

ETA: but either would be better than what we have now.
 
You do realize that EU countries don't have a VAT OR income taxes. They have higher income taxes AND a 16-19% on top of it.
 
RJKarl said:
You do realize that EU countries don't have a VAT OR income taxes. They have higher income taxes AND a 16-19% on top of it.
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i don't know about those exact numbers but the graphs I posted indicate that income taxes in EU countries are much less progressive than here. I think everyone understand that it is not an either/or proposition.
 
I wouldn't make that assumption. 2&2 has long been in favor of the "fair tax" which is RW buzzword for no income tax.

Here are a few other bigger EU countries (Top tax rate/VAT):

France - 45%/19.6%
Germany - 45/19
Italy 45/21
UK 45/20
 
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VAT adds ridiculous amounts of paperwork and cost to do business
 
No matter how the 99.9% gets taxed, it's not going to make a gigantic difference in dealing with endemic income inequality. It's about finding a way to un-rig the deck for a handful of titans who play a different game by different rules that just so happens to affect virtually every other person on earth as a byproduct.

Having the poors pay an extra couple of cents on their McNuggets and professionals pay an extra couple of points on their McMansions isn't going to change shit.
 
DeacMan said:
Yep.
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DeacMan is for about a 40-50% VAT/consumption tax. We have about a $4T budget. We have slightly more than $8T in retail sales. It would destroy the healthcare system to put the VAT on healthcare costs.

Basically we'd be killing the economy even with a 25% VAT as tens of millions or maybe even over 100,000,000 cannot afford this.

Imagine how poor and lower middle class families would do if their $120/week food bill would become $180.

The "Fair Tax"/consumption all talk about rebates to the poorest among us. this would dramatically the percentage.

As usual, Deacman and 2&2 like to post in canned talking points that would destroy our economy, but might save them money.
 
So talking about the reality of what a consumption tax would actually entail is "being off my meds"? You can't dispute what I said. so start with insults. It's been your MO for over decade. Why stop now?
 
RJKarl said:
So talking about the reality of what a consumption tax would actually entail is "being off my meds"? You can't dispute what I said. so start with insults. It's been your MO for over decade. Why stop now?
Click to expand...

Because you've been a miserable fuckwit for over a decade?
 
part of the European deal here is that everybody pays more taxes, but more gets spent on the poor. There is a greater net wealth transfer from rich to poor under these systems. That's what is shown by the first two graphs I posted. Their tax systems are regressive, but their spending is progressive. My theory is that the distaste of the elite for paying for benefits for the poor is ameliorated by the knowledge that the poor are paying for a non-nominal portion of their own benefits through the VAT.
 
In the US, our rich just don't like paying taxes and have a distaste for the poor.
 
Deacon923 said:
part of the European deal here is that everybody pays more taxes, but more gets spent on the poor. There is a greater net wealth transfer from rich to poor under these systems. That's what is shown by the first two graphs I posted. Their tax systems are regressive, but their spending is progressive. My theory is that the distaste of the elite for paying for benefits for the poor is ameliorated by the knowledge that the poor are paying for a non-nominal portion of their own benefits through the VAT.
Click to expand...

I think you have a point here. I think its get old for people to hand over half of their paycheck each week and them be told they are not doing enough. I would think it would contribute to build frustration and resentment.

I personally am vary wary of a VAT. Not really sure we want to go down the road of being Europe part deux. But part of that is I am ill informed of the long term consequences of such a change. Interesting concept though.
 
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