Olin Lathrop wrote:

> In practise, I think it would be very very difficult for a state to
> pass a VAT tax.  First the people would be pissed and the legislators
> would rightly fear for their jobs.  Second, that would be a major
> logistical problem for that state since things move so easily between
> states, and multi-state companies could use some creative accounting.
>  It would also be seen as a business-unfriendly state, making it hard
> to attract new manufacturing plants or to keep existing ones.

Would you please explain why you think that a VAT system is less=20
business-friendly than a (typical) USA-style sales tax system?=20

I think of it as the other way round: The effect is in both cases that=20
the consumer pays the tax and that he pays it only once (no accumulated=20
taxation, as for example with certain taxes in Brazil), but the=20
accounting for VAT is (in principle) simpler -- so VAT removes=20
bureaucracy, and as such is an advantage for all involved.=20

I did my taxes as a self-employed in Germany for many years, and it was=20
really simple. When I started to do the same in the USA, it was much=20
more complex -- and I didn't even get into sales tax questions, because=20
the benefit of getting a sales tax number, buying components sales-tax=20
free etc. just to spare a few dollars of sales tax wasn't worth all the=20
hassle related to it. (I didn't sell much, mostly providing services.)=20
But I would have liked it if I could have spared myself the expense=20
without the related bureaucracy.

In Germany with the VAT system, there was no bureaucracy at all: I=20
simply discounted every cent (well, back then it was Pfennig) of VAT I=20
had an invoice for from whatever VAT I had to pay for my own invoices.=20
(If the balance was negative, I even got VAT back.) No accounting=20
hassle, whoever sold me components didn't have to get a sales tax id=20
from me, they just sent me an invoice with the VAT spelled out, and I=20
got to deduct that VAT from the VAT I had to pay to the government for=20
my own invoices. To me this seems much more straightforward, and has=20
less bureaucracy involved.

Gerhard
--=20
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