Has anyone here heard of the theory to use a 1% VAT tax? Does anyone have any info on it?
Isn’t that just the “Fair Tax” sales tax proposal - but with a really low tax rate?
Nope. But it sounds like a great starting point for raising it to 25% within a few years!
VAT is an extremely humiliating form of tax. Every seller must prove to the government what he has sold, to whom, at what price, when. I helped my friend move to a new place. That must be VAT:d according to the schablon tables of the bureaucrats of what such a service “should’ve” been paid for, even if I chose not to charge any money for the service (my friend helped repair my car in return, Oops, another VAT moment of truth!)
Even for the totally naive honest person, VAT is extremely cumbersum. It requires immediate and eternal perfect records of all activities, presented to the government yearly or at their command any other time. Several percentages of the GDP are wasted in the shape of cooks, mechanics, engineers, truck drivers et cetera working as if they were unpaid tax bureaucrats, accountants and lawyers. Task in which they are unskiled, uninformed and totally uninterested. But if they don’t do it, they’ll be thrown in jail. So most entrepreneurs correctly calculates that they’d better not be entrepreneurs at all.
Many skilled efficient entrepreneurs are outcompeted by tax-system-crackers because of hugely disruptive and pacifying taxes such as VAT. Lately, I myself profit by cheating such taxes! VAT isn’t only a theft in itself, it does provide for everyone who deliberately misleads the government, and punishes everyone who is naive enough to pay any tax ordered from above. Introducing 1% VAT (from 0%) would hugely favour dishonesty.
Wow, I thought I was badly off with 19% VAT, but your fellow men in Sweden seem to be even more “taxophile”.
I wholeheartedly agree with your points. Do not fall for the VAT scam. Instead of / in addition to reporting your income, you’ll have to report all the details of your sales. It’s one mile further down the road to serfdom.
There was a calculation done by CATO or Von Mises I think (I may be wrong) that had the numbers showing a 1% VAT could work, but I never got a chance to see the numbers or really read about it. But the premise was just a 1% VAT on everything instead of property/income/death taxes.
“Work for what”?
How much government does that buy?
The problem with taxation is that it undermines the principle of property rights. The rate or system, as long as it is involuntary, is irrelevant.
Liberty Student,
You make an excellent point. I am always amazed at how people are searching for the most effecient way for the government to ROB people.
This is not a post about the philosophy of taxation. I agree with you 100% that taxes are an evil thing. That isn’t the point of the post though. We live in a society that is going to tax us, and I would bet good money (under the table, of course) that while I continue to live in the US I will be taxed for the next decade. Yes it is great and valuable to argue for the abolishment of taxation, but that is for a different thread. It is also useful to be looking for much more practicle and attainable goals along the way. Radicalism is always necessary and more important but compromise can work wonders too. Taxes are evil but I still pay them, that in iteslf is a compromise of values.
If canidate A offered to tax me $100 a year and canidate B offered to tax me $99 dollars a year, with all other things being equal I wouldn’t hesitate to vote for canidate B (yes I know voting is evil) I wouldn’t feel bad about it, I just helped myself out, and if I had a family to take care of it would just be cold hearted for me not to try to give them more money. If politicians and people can be reasoned with better by less radical ideas, than use less radical ideas to sell to them. You can still argue, publish, or whatever for the intellectual ideal. Fabianism worked WONDERS for socialism in the west, couldn’t it do the same for libertarianism?
I think this thread may be in danger of getting way off topic.
Lew Rockwell on tax reform and the VAT. Here