The main problem with these changes is that they require the seller to collect information about the buyer's location. It makes all the sense for physical goods, but it is nigh impossible for digital ones, and pretty much misses the whole point of online economy.
In my opinion, the VAT should be charged based on the delivery address; for digital goods, it would be ideal that all purchases are considered local, and the countries could have an option to introduce a separate "digital VAT rate" that would apply to such purchases.
" The change was made because EU wants to get more money from American companies " That is not true - VAT is and has always been a tax for the buyer, not the seller. Of course, having VAT is awful for us - in my country it's an astronomical 24%. But that's besides the point.
> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…
"[24% is] lower than the income tax rate for a middle class American."
Do you have a source for that?
(I ask because I'm definitely upper middle class or possibly lower upper class and I'm only paying ~25% (and I'm in no way tax efficient). Everything I've seen puts the middle class income tax rate below 15%.)
> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.
How is VAT regressive or hidden? For a start, I'd say that just about every EU citizen is aware of it. Plus, prices in shops have to show VAT-inclusive prices to end customers, unlike some states in the USA where sales taxes can get magically added on to the final bill. Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. If I buy a luxury yacht, I'll end up paying more V…
I'd argue that showing pre-tax prices and charging tax at checkout makes the tax burden much more obvious to most consumers. Showing only the post-tax price on the tag hides the proportions of the tax vs item cost.
> US has a 30% tax burden, UK has a 40% tax burden. France and Germany have >50% tax burdens. The last three have some form of nationalised healthcare though, which the US does not. As a US citizen, I'm happy to have an increased tax burden for legislated vacation/holiday days and 20% of the population not having medical bills they can't pay for.
It's more like 80% of the population, when considering expenses not covered by insurance. A hospital can charge you for anything and you're legally obligated to pay it.
> A hospital can charge you for anything and you're legally obligated to pay it.
Categorically, unequivocally wrong.
Hospitals cannot just make up charges. They cannot bill you for procedures/tests/services you did not receive (and if they do, you are not "legally obligated to pay it").
I know the anti-US healthcare circle jerk is pretty strong here, but we don't need to just make things up in order to prove a point.
"If you ask me – YES it is crazy. There are 28 member states and over 75 different VAT rates – which I should all know and create different invoices for."
If only we had some sort of programmable calculating device to automate this kind of drudgery.
You're comparing income tax with sales tax. In the UK, on a salary of £40k (i.e. professional mid-career engineer), before you touch the money, the government takes about 25% for income tax and national insurance. Then, they take 20% of everything else that you spend unless it's non-luxurious foodstuffs, children's clothes or paper books. And, of course, if what you're buying is fuel, they actually take 85% of the pr…
> US has a 30% tax burden, UK has a 40% tax burden. France and Germany have >50% tax burdens. The last three have some form of nationalised healthcare though, which the US does not. As a US citizen, I'm happy to have an increased tax burden for legislated vacation/holiday days and 20% of the population not having medical bills they can't pay for.
The working poor get shafted in America, but the middle class gets a better deal. They hardly pay taxes, get employer paid health insurance and vacation.
> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…
" [24% is] lower than the income tax rate for a middle class American. " Do you have a source for that? (I ask because I'm definitely upper middle class or possibly lower upper class and I'm only paying ~25% (and I'm in no way tax efficient). Everything I've seen puts the middle class income tax rate below 15%.)
Not the person you're replying to, but maybe these numbers will help:
- The median household income for 2013 was just under $52,000 [1]
- For that same year, the marginal tax rate for a single person making that income was 25% [2]
- If the household is married that drops to 15%.
Most Americans on HN are very likely upper-middle class in income, since that generally means $62,500+ in personal income and a six-figure household income [3]
I think these income stats are incredibly interesting. I never would have considered my wife and I to be upper-middle class either in wealth or income, but according to every set of figures I can find we're pretty solidly in the top 5-8% range nationally. It can be misleading what "middle," "upper middle," and "upper" really mean if you're strictly speaking about gross income.
It's more like 80% of the population, when considering expenses not covered by insurance. A hospital can charge you for anything and you're legally obligated to pay it.
> A hospital can charge you for anything and you're legally obligated to pay it. Categorically, unequivocally wrong. Hospitals cannot just make up charges. They cannot bill you for procedures/tests/services you did not receive (and if they do, you are not "legally obligated to pay it"). I know the anti-US healthcare circle jerk is pretty strong here, but we don't need to just make things up in order to prove a point.
It's true that they can't just make up services, but they can do a pretty wide range of things and bill you for them, without giving you the price in advance. My dad was in the hospital once, and got something like 20 separate bills, for different services he had no idea he had received (and had no way to verify if he had even received). And my mom actually did get a half-dozen or so bills for services she definitely didn't receive. She went to the ER, checked in, but ended up leaving before getting any services whatsoever: after >1hr waiting in the ER's waiting room, she started calling around to see if she could be seen somewhere else, and left when she found a nearby urgent-care clinic that could see her. They still billed her for a "standard" ER work-up, including line items for a blood test and lab work! She had not had blood drawn, and clearly no lab work was done. Obviously she didn't pay that bill, though: if you really have good evidence that the service was not performed, you can challenge it.
> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…
" [24% is] lower than the income tax rate for a middle class American. " Do you have a source for that? (I ask because I'm definitely upper middle class or possibly lower upper class and I'm only paying ~25% (and I'm in no way tax efficient). Everything I've seen puts the middle class income tax rate below 15%.)
There's a ~15% payroll tax (income tax by another name) for social security and medicare. The bulk of the median household's remaining income will be taxed at 15%. There's some fudging for deductions, I suppose, but that's also leaving out state and local income taxes.
The point was that a 24% VAT doesn't mean much to me when other major taxes are left unmentioned. It actually sounds like a great deal if income and property taxes are only nominal.
EDIT: You're likely neglecting to include both halves of your payroll taxes.
> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…
You can't compare VAT to income tax, they are very different beasts. And yes, although I can't speak for the GP, in Finland (and other Nordic countries) other taxes are high as well. Not that I'm necessarily complaining, although VAT as a concept certainly has its problems.
For the purposes of comparing the effects on the individual taxpayers, it seems fair to me. Structural differences aside, a 24% VAT sounds great if there are no other taxes and there is some deduction or subsidy to counteract its regressive effects.