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The missing profits of nations

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Re: The missing profits of nations

#101

Post by ucaetano »

DomreiRoam wrote: post #95
ucaetano wrote: post #81

Earlier quoted context omitted.

Oh, I know, all the splitting up on price-elasticity of demand and so on. But the issue with sales taxes is that it is applied on the final sale, which generate distortions when the products are being imported, or have a long supply chain spread across a country, as it is a tax on the consumer, the value is only capture at the consumer location, not along the supply chain (that's what I meant as a terrible idea).

I'm not sure if you oppose sale tax only or also VAT. Both are regressive but VAT, while more complex, is based on taxing the added value so it is collected along the supply chain. In the supply chain everybody is charging VAT on their sales invoice and deduce VAT on their purchase invoice. BTW, you must pay to the tax authority the VAT your charged you client even if he/she didn't pay you. https://tax.thomsonreuters…

I don't oppose a production/consumption tax, it is necessary given the intricacies of the world, but we need to keep in mind that it is regressive, and will impact the poor more, when making decisions about taxation.

But between VAT and sales tax, I strongly oppose a pure sales tax, although I would be ok with VAT charging a final tax which is allocated to the consumer location (vs. the location of the business).

Pure VAT: taxed where value is generated.

Pure Sales: taxed where the consumer is based.

Mixed VAT-Sales: mostly taxed where the value is generated, plus where the consumer is based.

The mixed VAT-Sales model would generate a better allocation of tax funds across the entire supply chain, all the way to the consumer.

Re: The missing profits of nations

#102

Post by snidane »

Tushon wrote: post #48
mlinksva wrote: post #40

Earlier quoted context omitted.

> Large companies should be taxed where the value is created. Tax land.

What does that mean? Some companies have no physical presence.

I'll explain. You probably wouln't collect much in land taxes from these large tech companies.

But why this eagerness to tax them so much in the first place? Because of unfairness relative to smaller companies and employees who carry the whole burden of taxation and those tech giants pay close to zero.

In land based tax system you wouldn't collect much from large tech, but you wouldn't collect much from small businesses and employees either. Fairness achieved.

Now you might ask, wouldn't we be really short in tax revenues if we kept only land taxation? The answer is pretty surprising that it would likely collect even more revenue that current system based on sales tax, income, vat, etc., but I encourage the careful reader to study land based tax systems on their own to discover their simplicity and beauty.

I'll just hint that there is so much value stored in real estate (of which the biggest part is its location value, ie. land) that it dwarfs world stock and bond markets together. So just imagine making it a base for a tax.

Re: The missing profits of nations

#103

Post by DomreiRoam »

ucaetano wrote: post #101
DomreiRoam wrote: post #95

Earlier quoted context omitted.

I'm not sure if you oppose sale tax only or also VAT. Both are regressive but VAT, while more complex, is based on taxing the added value so it is collected along the supply chain. In the supply chain everybody is charging VAT on their sales invoice and deduce VAT on their purchase invoice. BTW, you must pay to the tax authority the VAT your charged you client even if he/she didn't pay you. https://tax.thomsonreuters…

I don't oppose a production/consumption tax, it is necessary given the intricacies of the world, but we need to keep in mind that it is regressive, and will impact the poor more, when making decisions about taxation. But between VAT and sales tax, I strongly oppose a pure sales tax, although I would be ok with VAT charging a final tax which is allocated to the consumer location (vs. the location of the business). Pur…

in theory, when all transactions happens between participants on a free market, then the real value added by a participant tend to be their sale price minus all their cost.

I think it's only when you have non perfect market condition (like monopoly, monopsony, captive company) that the real added value is not visible and where your idea of mixed taxes is needed. Do you think it make sense or do you something other in your mind?

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