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A tax is a tax is a tax. Just a legalized way to take from another. If the takers never learn to make do with what they are authorized to take, they just ask, or don't ask, to take more. The political group of takers have been given to much freedom to just justify their taking. The non political group of takers are called thieves.

I like the idea of a VAT. It's an automatic loop hole plugger. Buy a Porsche, pay the man! The only thing that worries me is the folks in DC will create a VAT but still leave the income tax in place. A tax or a program once created is very difficult to remove.

This VAT guru was quoted extensively in today's Pioneer Press if you're looking for more information.

Let me see if I understand how this works. A guy making $30,000 a year pays $20,000 for a new car. He pays $3,000 in taxes at 15% VAT. That's 10% of his income for the year. Now comes a fat cat who makes $50 million a year. He buys the same car and pays the same tax which is .00006 % of his income for the year. Assuming they make no more purchases for the year, the government receives $6,000 in taxes. Using the current system, the little guy may pay $2,000 in taxes and the big guy would have paid lets say $7,500,000 in taxes at 15%. The government would have received $7,502,000 in taxes using the current system. Have I missed anything here How do we pay for those wars. Let me say right up front I'm not too smart when it comes to these types of issues so I could be way off base here.

fredsheldon wrote:Let me see if I understand how this works. A guy making $30,000 a year pays $20,000 for a new car. He pays $3,000 in taxes at 15% VAT. That's 10% of his income for the year. Now comes a fat cat who makes $50 million a year. He buys the same car and pays the same tax which is .00006 % of his income for the year. Assuming they make no more purchases for the year, the government receives $6,000 in taxes. Using the current system, the little guy may pay $2,000 in taxes and the big guy would have paid lets say $7,500,000 in taxes at 15%. The government would have received $7,502,000 in taxes using the current system. Have I missed anything here How do we pay for those wars. Let me say right up front I'm not too smart when it comes to these types of issues so I could be way off base here.

You understand correctly A 'sales tax' is essentially a 'poor tax'.

A 'flaw' in your example was the single purchase example. Methinks one who rakes in $50,000,000.00 annually will most likely purchase other things. I remember a 'luxury' tax back in my younger days. Still makes sense to me. If you can afford expensive gee-gaws, you can afford the tax. Poor folks do not purchase gee-gaws.

Bottom line is, control the expenditures and the taxes can be diminished!!!

Good luck with that!:D

You got it right Fred, a person making 30K a year has to buy the same amount of essential as someone makiing 500K, we will leave bling purchase out of the equation, I am talking living/life essentials. So lets say that cost is 5k a year. Well you can see who pays a higher percentage of there income in taxes.

Even billionaire Warren Buffet admits he’s at a lower tax rate than his secretary. The wealthy spend an incredible amount of money to maintain their lifestyle and have many tax lawyers and loop holes to help them avoid taxes. Under a VAT their spending would all be taxed.

I guess the question is how much would the wealthy have to spend each year to generate the same amount of taxes as they would under the current system, assuming they don't try to game the system. Once you have accumulated all your toys, then it's just maintaining what you have which wouldn't generate near as much in taxes, I would think. I'm sure that if this was such a good idea, at least one country would be using VAT/Sales Tax as their main source of funds, would they not? BTW, is this the right place to be discussing this

Oh Fred, just in time for a long weekend???? Dont go there!!!!
BTW, is this the right place to be discussing this
Tom
Your observation about Buffet, it is a misnomer!!! His secretary pays income tax on wages earned from an employer.
He pays taxes on investment earnings, a whole different tax scale. Because he already paid the income tax on the money he "earned" to put it into those investments, so he is being taxed twice, once on the income earned $, then on the income earned on the investments, ie divedens, sale of stocks, if they increased in price over what he bought them at "capital gains" which is at a different rate, which is lower then annual income tax on wages earned.

Your right under the tax system today Buffet is being taxed twice. However if a sales tax was in place people that buy $200,000 cars, million dollar mansions, live in Park Ave Penthouses, buy custom built 727's and Gulfstreams would pay for their necessities.

If they didn't spend their money they could sit on it and pay no tax but then what would be the point of having the money?

I know what I paid in taxes percent wise each year. I also know the amount.
What frustrates me is people that live in a house valued at 10 times mine, drive cars valued at 10 times mine, spend money 10 times faster than I can and pay less taxes both in actual amount and percentage. And their money didn't come from investments.

I know business owners that gross profit is more than a million a year. Their taxable income is less than $30,000 yet they are able to buy a $2.5 million dollar apartment complex. Now where did that money come from??? Wise investments? That in my opinion is the problem with today's tax system.

Another example. I have a friend that went into hock and built a strip shopping center. I watched the center and was amazed how often a tenant would come in, build out and then close a couple of month later. This was a center with about 15 stores.

I remarked to him that the high number of turn overs had to be painful for him. NOT AT ALL! he replied. The more the better! Apparently with the tax breaks afforded him by these turn overs enabled him to pay the initial loan off in less than 5 years and to build two more centers. He told me he wants at least a 50 percent turn over rate a year and 100% would be better.

I haven't seen his 1040 but he claims he pays nearly zero taxes and own presently owns outright a 1+ million dollar house, a Bentley, Humvee, Porsche, high dollar diesel pickup, and a custom built Prevost Motor home.

That again is the problem with the tax system we now have.