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Sales tax creates more unnecessary pain than value added tax

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

#11

Post by rgbrenner »

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 employees doesn't affect sales tax.

What he also misses: is that if I sell something to another retailer for resale (meaning he says he's going to resell what I sold him), I don't charge him sales tax on the entire purchase. Not until it reaches the final consumer is sales tax charged.

He says this isn't true, and links to a wikipedia article on a gross receipts tax. This is another confusion on his part. Some states do not have income taxes, and instead have gross receipt taxes. This is an alternative to business income taxes, not sales taxes.

The confusion is understandable. No one has ever accused the US of having a simple tax system.

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

#13

Post by salamander014 »

xwdv wrote: post #4

Sales tax is better at driving capitalist competition than VAT, so it works far better for American society. The consumer wins.

That seems nearsighted to me. Making it cheaper for vertically integrated businesses to make money kind of forces bigger businesses to buy smaller ones.

This same idea also means that smaller businesses aren't on the same playing field as bigger businesses, because they can't afford to vertically integrate as much. They don't have as much cash to spend. This means that small businesses naturally have a harder time growing.

And this becomes an oligopoly problem. The big businesses get bigger and the small businesses either get bought or get put of business.

That doesn't sound like a healthy market to me. I would much prefer a market with many competitive small businesses that work with other small businesses to build products.

Better products and choice of products are guaranteed this way.

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

#14

Post by disposekinetics »

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.

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

#15

Post by locallost »

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

it applies, that's the whole point of the "added" part. you pay the government their full cut, but you get all the VAT you paid for back. so only the difference is taxed to you, as is to everyone else in the chain.

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

#16

Post by polote »

rahimnathwani wrote: post #6
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

> Because I guess if we had sales tax > companies wouldn't pay it either Then it would more accurately be called a VAT, than a sales tax.

so only the companies which sell to citizens add value?

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

#18

Post by Phenomenit »

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

VAT is a tax on the final consumer collected with the aid of the companies in the supply chain.

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

#19

Post by polote »

locallost wrote: post #15
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

it applies, that's the whole point of the "added" part. you pay the government their full cut, but you get all the VAT you paid for back. so only the difference is taxed to you, as is to everyone else in the chain.

yeah you are right, I'm wrong

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

#20

Post by gowld »

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…

> What he also misses: is that if I sell something to another retailer for resale , I don't charge him sales tax on the entire purchase.

This is covered in the article: "a retailer usually won’t pay sales tax on a manufactured good they intend to a consumer in the same form."

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