Isn't EU's "VAT" a regressive tax? Why do they have that, instead of something like, taxing the rich?
Many EU countries have a "VAT" and like feel like this is kinda targeting poor people. Like, for the rich, this is insignificant, for poorer people, a (example) 20% tax would be a huge burden. Why do they do this?
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They also tax the rich through progressive income taxes, capital gains taxes, corporate taxes etc.
If you're asking why not just tax the rich in place of a VAT, well, it's sort of why not tax the rich to pay for absolutely everything we could want. The costs and difficulties in taxing the rich generally scale to the point where the marginal revenue raised by the tax becomes negative.
And this is why the 1983 tax cut in the US increased revenue as at the reduced rates more wealthy people paid rather than avoided taxes.
Oh interesting, I wasn't aware there were actually examples of the Laffer curve working in reality! I alwats thought it was just a theoretical that conservatives had latched onto...
It is the only incident of Laffer being proven correct as far as I know. It is the 2nd to last time spending was cut along side taxes.
Cool to know about, thanks!
Sadly we should cit spending along side tax cuts. Had we done that things would be better
Honestly, I'm just not sure deficit spending outside of wars/economic emergencies was a great strategy and instead, a time bomb Reaganomics left everyone else to deal with. I think that's the ridiculously outsized part of spending that would've been the best to cut. If I remember correctly, servicing the debt is now on par with American military spending...
Yeah but honest well thought out economic conservative budgets are rare and unpopular.
Yeah, I'm not sure I've seen any of those in my lifetime. I'm Canadian and even Steven Harper, who would be almost a Democrat by American standards, wanted to go to war with the census for Reasons.
Broadly though, my understanding of Conservative values, peeling back the state, more self reliance etc is broadly unpopular to the many who think the state has a big role to play in social welfare from education to healthcare
If you could offer just rough ideas/goals, what would your sane, honest Conservative budget feature? Not looking to fight just genuinely curious. (No numbers obviously but like what would you want to cut. No vague "government waste" though please.)
I don't mean specifically politically conservative rather an economic conservative plan. It wouldn't be too crazy if we cut taxes and cut spending at the same time. That's unpopular though because so many never studied econ
Fair but I'm not sure what the point of spending cuts is beyond ,shrinking the state, cooling down an overheated economy or reducing a deficit. What am I missing?
A lot of government spending is super popular (think entitlements, healthcare, infrastructure etc.) I have an econ degree (admittedly, not particularly used as I'm now a dev) but I'm still not seeing a particular impetus...
If you’re asking why not just tax the rich in place of a VAT, well, it’s sort of why not tax the rich to pay for absolutely everything we could want.
So basically, you can only tax so much before the rich get mad and leave the EU? 🤔
No, you can only tax the rich so much because a lot of the money is laundered through internationally sanctioned loopholes. There was a plan for that, but then some morons elected Trump so now that's probably not happening.
But sales tax still works for that, since if you want to buy a Ferrari we're keeping 20% automatically at the point of sale.
And since rich people tend to spend more money than poor people, sales tax is more regressive than other taxes, but not as much as one would think.
But sales tax still works for that, since if you want to buy a Ferrari we're keeping 20% automatically at the point of sale.
Unfortunately, that is very easy to circumvent. Rich people usually own companies which made them rich in the first place. They can easily buy cars in the company name and write not just the VAT off, but income taxes as well.
Not really. You have to provide your own business ID in order to not be charged VAT, and they gets noticed and registered.
You'll have to then explain why the Ferrari, specifically, was a business expense. If the tax administration doesn't think it's a good reason, you then have to pay the VAT anyway.
And don't even get me started on the fucking bureaucratic stupidity that is importation or I'll have to take my blood pressure medication.
Source: starting up my own business in Finland. Rip 25.5%VAT. Fuck NCP.
Oh here in Estonia you just declare the VAT and you'll be good. They COULD look up what's going on, but the Lamborghini Urus I saw registered as "for work driving only" the other day, begs to differ. You can look up vehicle data for all Estonian reg vehicles and oftentimes you'll see them as being company cars without an exception for private driving (which would cost extra taxes, based on engine power)
I should have elaborated.
In the EU, if buying from another EU country, you just put in your VAT# to exclude VAT. But your country's tax administration can then ask to justify a business expense. You can only claim VAT paid on foreign (non -EU) imports once doing taxes for reimbursement if it was paid.
I have a feeling Estonia's tax administration doesn't ask as many questions as the Finnish one.
That said, there's usually an actual exception for luxury cars, if it's for your sales people (or if you do the sales, yourself). Luxury branding can be used as a "marketing tactic" due to "presentation". Basically, if you're meeting with a potential customer, looking like you're successful technically makes you look more reliable. Essentially business attire for your personal transportation.
Not saying it's necessarily true, but it's actually a really old thing done in many countries.
In Estonia with a company car it's basically "Oh I use it to visit clients" if you ever get asked. Doesn't matter what your company does and if sales is involved - you're just visiting established clients from time to time for business reasons, instead of having, idk, an online meeting, or sending an email.
And nobody at the tax administration seems to care if you visit your customers in a Dacia or a Porsche. And if someone DOES ask, the whole presentation thing you pointed out, would be an excellent excuse.
That is true with or without VAT. VAT isn't paid by the buyer, either. It's the seller that makes the VAT payment.
So sure, the rich asshole may try to write off the Ferrari in their business tax, along with all the other loopholes (good luck with that, too-- I've gotten audited for much less), but 20% of that cost still went into taxes because the dealership paid in their VAT every three months like a good boy. That's the entire point.
VAT dodging is an art and a science for contractors of all stripes and other grey economy actors, but if you're a standing business like, say, a former Fiat subsidiary with a large worldwide business headquartered in Italy, VAT is the one tax you don't get to mess with because it's baked into every invoice.
More like the rich will get even more proficient in tax avoidance
No, EU member states handle taxes individually.
But, that ease of travel is one inducement. (Consider, as billionaire Spaniard learns the government plans to tax an additional 100 million euros. With no border, is moving a few km next door to Portugal worth a 100 million?
More meaningful though is business taxes/regulations, which are a large part of why Europe has lost so many Unicorns to the NYSE and why within America, Texas is kind of killing it in terms of business relocations.
I personally think it's a race to the bottom but those are the constraints that exist.
No