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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

#121

Post by sbuttgereit »

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…

I was a corporate manager in a few retail chains with a national presence, a professional services consultant for a software company selling inventory management and point of sales systems to mid-sized chains, and I now consult to distributors and manufacturers regarding ERP and accounting system implementation... roughly 25 years in areas dealing with this question. Your take is pretty good. U.S. sales tax is pretty much a consumption tax across the board. If you are business and are buying for manufacture or resale, you don't pay sales tax; those same businesses will pay sales tax if they business is itself a consumer... so a manufacture will pay sales tax on the paper they buy for the office printer, etc. but not until you get to the end consumer (and by consumer I don't necessarily mean individual person... a consumer can be a business).

I stopped reading the article at "The Sales Tax Regime": it's just wrong. It's not how taxation works for the most part in the supply chain. Not that this was the only problem to this point in the article. The opening point about the "rest of world" is itself one of the classic informal fallacies: argumentum ad populum. At that point it became clear to me that the author didn't have anything on offer that I would learn from.

There is a real problem with sales taxes in the US, but its not found in the article. The problem is the complexity. While there are broad rules of thumb that allow us to generalize that products sold as raw materials or for resale aren't taxed: there are many very nuanced exceptions. Sales taxes and exclusions/inclusions of same are determined at the city, the county, and the state level individually: all with different rates and rules and reporting schemes. And then introduce things like sales tax holidays and the like and get these changing constantly and it's amazing that any of us in the business aren't in prison for tax evasion.... whole companies exist just to keep up with it all. Now of course, that's not just limited to "the sales tax regime". The most difficult tax rule I ran across in retail was in Canada. British Columbia had a rule at the time that certain classes of clothing being sold to children 14 years or younger between certain dates (in the fall as I recall) didn't have to pay the provincial tax (GST applied however)... I might be remembering some details wrong: that was the mid 90's. But getting a general purpose point of sale system to enforce that in a general sort of way was an interesting challenge.

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

#122

Post by int_19h »

Fnoord wrote: post #74
tobias3 wrote: post #51

Earlier quoted context omitted.

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.

That is how it works in The Netherlands as well. What is also great: all products targeted at consumers must contain VAT price. If it isn't mentioned, it is assumed it includes VAT. They don't get away with "oh sorry, forgot to mention VAT" at checkout. Contrast that to every time I buy something from USA its like "oh, you gotta pay your duties" bwam extra ~20+% on price , and all prices in online discussions which a…

The way it is in US is deliberate - the premise is that you want people to be aware of how much tax they're paying, on the basis that they would be more politically active about taxes if they knew.

There are other countries with sales tax which don't have this cultural quirk, and where prices normally (whether by custom or by law) include the tax.

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

#123

Post by int_19h »

GloriousKoji wrote: post #71
oblio wrote: post #37

Earlier quoted context omitted.

What's the painless alternative?

Government prints as much money as it needs to pay itself. Now inflation and interest rates might be different type of pain but at least it's not the same pain of filing taxes, figuring out laws or finding someone to do that for you.

This would be mathematically equivalent to a wealth tax on savings in cash or cash-equivalent, no? Meaning that the burden would fall mostly on those who have enough money to save it, but not enough to invest into real estate etc.

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

#124

Post by exabrial »

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

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

What's the painless alternative?

I think there's a couple of options. First if one was to consider the US government a charity they would have a zero star rating on charity navigator; for tax dollar collected versus put to good use. So starting with the end in mind and measuring the result would be the alternative.

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

#125

Post by eganist »

joshspankit wrote: post #73
camhart wrote: post #53

Earlier quoted context omitted.

I agree with this. I wish there was more of it. However it seems to me like this is becoming more and more rare on HN or harder to find by being drowned out.

From experience: Watch out for “seems” in these cases. The number of times I’ve heard someone say “_____ is not like it used to be”, or “it’s harder to find ____ in (name community/event/location/etc)” is significant, and even when it’s true short-term, it rarely pans out long-term unless that very thought spreads to enough people that it becomes a self-fulfilling prophecy. Like do what you want it’s your life. I’m j…

Would be interesting to automate retrospective analysis across every comment posted on HN and chart language trends over the years.

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

#126

Post by [deleted] »

dyno-might wrote: post #66
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...

[deleted]

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

#127

Post by peteretep »

Fnoord wrote: post #74
tobias3 wrote: post #51

Earlier quoted context omitted.

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.

That is how it works in The Netherlands as well. What is also great: all products targeted at consumers must contain VAT price. If it isn't mentioned, it is assumed it includes VAT. They don't get away with "oh sorry, forgot to mention VAT" at checkout. Contrast that to every time I buy something from USA its like "oh, you gotta pay your duties" bwam extra ~20+% on price , and all prices in online discussions which a…

> What is also great: all products targeted at consumers must contain VAT price.

Took this far through the comments to get there. There’s a lot of competition for “the worst thing about America”, but it tops my personal list.

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

#128

Post by taxcoder »

telaandrews2 wrote: post #108

I lead product for one of the leading US sales tax solutions, and have also built products automating EU VAT solutions. I came into these roles with little subject matter expertise, but with enthusiasm for making it easier for small businesses to thrive. So, take these inputs with that perspective, please. VAT tax rate calculations are trivial, but filing returns is complex. Sales tax calculations are complex, and so…

> To simplify the US tax system, we first need to solve how we equitably fund local governments.

I agree differences between states drive much of the complication, with local jurisdiction taxes, such as in Ohio, adding much more complication. My political views fall more to the right than many HN participants, so I am slow to support the Federal government mandating sales tax changes. Do you have an opinion on the Streamlined Sales Tax Governing Board? streamlinedsalestax.org

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

#130

Post by secondcoming »

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…

If you can claim the tax back what's the point in charging it?
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