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Sales tax creates more unnecessary pain than value added tax

dyno-might.github.io

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Re: Sales tax creates more unnecessary pain than value added tax

#61

Post by bluecalm »

Sales tax and VAT are equivalent assuming everyone plays by the rules, this is economy 101. The difference is in the implementation and where places for abuse are. With VAT you charge it everywhere in the chain and then apply for refunds if the total you paid is higher than the total you collected. The argument is that this makes VAT more difficult to game but this doesn't sound very convincing seeing how the whole criminal industry was created around gaming governments for fraudulent VAT returns. This caused the governments to create more and more reporting requirements making life more difficult for honest businesses. VAT also causes liquidity problems if you rely on fast refunds. This makes it difficult for small businesses because liquidity is a bigger problem for them. What often ends up happening is that they just have higher prices to make up for delated VAT returns.

Living in a VAT country I am not a fan of it. I think taxing consumption is a good idea in general but the burden of the current implementation is too high.

Re: Sales tax creates more unnecessary pain than value added tax

#63

Post by saalweachter »

oblio wrote: post #37
exabrial wrote: post #5

> Tax creates unnecessary pain There, fixed it for you.

What's the painless alternative?

Inflation -- the government prints money, devaluing all existing money. It's a tax with no paperwork involved.

Re: Sales tax creates more unnecessary pain than value added tax

#64

Post by megiddo »

pionar wrote: post #26
jmole wrote: post #22

Earlier quoted context omitted.

Where can you file for sales tax reimbursement? Essentially all online resale sites (eBay, Reverb, etc.) are charging sales tax on secondhand goods. So if I buy something, then sell it later, that first purchase should be considered a "resale" purchase, right?

If you're a registered business with a tax ID number, you can deduct sales taxes paid on business inputs (supply) on your income taxes, whether personal or business.

In Texas, you can deduct sales tax paid on non-taxable purchases from sales tax owed on taxable sales.

Re: Sales tax creates more unnecessary pain than value added tax

#65

Post by TazeTSchnitzel »

tobias3 wrote: post #51
polote wrote: post #3

In France when you are a company you don't pay VAT on stuff you buy from other companies, so the main point of the article doesn't work. Because I guess if we had sales tax, companies wouldn't pay it either Edit: My point is that it will not make a company economically more efficient than several companies

If it works the same as in Germany you only pay no VAT if you buy from a company in another EU country as a company. Therefore the EU has both a sales tax and a VAT depending on if you look at individual countries or the EU as a whole.

No, you must pay VAT on intra-EU B2B transactions too. The accounting is more complicated because the buyer pays rather than the seller, but it is still there.

Re: Sales tax creates more unnecessary pain than value added tax

#66

Post by dyno-might »

rgbrenner wrote: post #11

I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…

Author here. I very much appreciate your polite tone! I'm aware that taxes on items for resale aren't treated like in the toy model. (This is mentioned in the article already.)

Can you please take a look at this article and let me know if it changes your view:

https://www.cost.org/globalassets/cost/state-tax-resources-p...

Re: Sales tax creates more unnecessary pain than value added tax

#67

Post by kube-system »

jmole wrote: post #22
rgbrenner wrote: post #11

I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…

Where can you file for sales tax reimbursement? Essentially all online resale sites (eBay, Reverb, etc.) are charging sales tax on secondhand goods. So if I buy something, then sell it later, that first purchase should be considered a "resale" purchase, right?

On eBay, you can enter your tax exemption credentials here: https://www.ebay.com/help/buying/paying-items/paying-tax-eba...

Re: Sales tax creates more unnecessary pain than value added tax

#68

Post by Dylan16807 »

disposekinetics wrote: post #14
exabrial wrote: post #5

> Tax creates unnecessary pain There, fixed it for you.

It makes intuitive sense right? There exist mutually beneficial transactions that cannot happen because they are mutually beneficial at the original price point and not at the taxed price point.

Well, a tax on profit or wealth doesn't do that.

Re: Sales tax creates more unnecessary pain than value added tax

#69

Post by squeaky-clean »

Pet_Ant wrote: post #44
Pfhreak wrote: post #21

Earlier quoted context omitted.

Most of us enjoy going to a thing called a "store" where there are usually a variety of options to choose from, where one can easily compare side by side from different manufacturers.

Really? Don’t most of us going into a store, find something, Google reviews, and competitors, and competitors’ reviews and then see if the convenience of being already here outweighs the effort of going somewhere else plus it’s marginal utility increase? Honestly, I’ve shifted a lot of my regular purchases into Amazon subscriptions.

Amazon is still a store though, unless you're exclusively buying Amazon brand products.

Re: Sales tax creates more unnecessary pain than value added tax

#70

Post by mywittyname »

chrischen wrote: post #46
mywittyname wrote: post #36

Earlier quoted context omitted.

How so? 1) second-hand goods purchased from a non-business are usually tax-free. With the exception of vehicles. You're asked to pay sales tax on these purchases when filing your income tax each year, but in practice, noone does this. 2) I buy used/refurbished tools and furniture pretty frequently. How exactly is the second-hand market being crippled here?

Are you talking specifically about cash transactions? Because ebay collects sales tax now.

Most sellers on eBay are businesses.

But you can buy stuff on FB Marketplace or CL without paying sales tax, even if you use a service like venmo for handling payments. In most states, you are technically supposed to report these transaction on your income tax return, but enforcement of that is not practical for the state.

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