what a value added tax would mean to the u.s.

Tuesday, April 13th, 2010

you know how everyone screamed and whined about how mike (i have a show on fox news) huckabee wanted to get rid of the u.s. income tax and introduce a flat tax on goods –a consumption tax. and how everyone said it was regressive –would disproportionately hurt poor people. well, now the u.s. government (which has no money but still manages to give at least one country 3B dollars per year) wants to introduce a VAT.

so here’s the thing with the VAT. if i’m a farmer, i charge your local supermarket a VAT of say 20% (it is 19 in germany and 25 in sweden). he adds 20% to the price of your goods. –your state sales tax gets added on top of this. so the farmer deducts his expenses from the VAT he charged the supermarket (such as feed for his farm animals, equipment bought that quarter, etc.), so he gets to keep part of the tax he charged his the supermarket. the supermarket owner does the same for the goods that you purchase. so in the end, the tax is pushed off on the consumer. if you own your own biz or are a freelance photographer and need to buy goods or services related to your job. then you can deduct your expenses from the VAT before you hand it over to the government.


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