The VAT: how the rest of the world pays for social programs

[Recursion]

We really need to stop fearing this.

[Wounded Bear]

1. The US is so driven by RW memes based on fear and hatred...

[Recursion]

2. It's the left that's stubbornly resistant to this one.

"It's regressive!" people cry.

Yes, in theory, it is, but it's how they fund universal healthcare, so it seems to be worth it.

[DonCoquixote]

3. true, but do not forget

the rest f the world gets higher wages than us, so the vat does not stop people from buyig their milk and bread

[applegrove]

5. You don't pay a vat at the grocery store. You do at a restaurant.

[Recursion]

9. No, they don't. We're a high wage country compared to most of Europe

The UK median income is £22K or about $28,000; it's $32,000 in the US. France is about $31K, Germany $30K.

[Farmer-Rick]

26. Yeah, but they get mostly free health care and college tuition with that

$1,000 to $4,000 is not enough to offset the cost of healthcare and tuition.

[Recursion]

27. Paid for by -- wait for it -- a regressive VAT

It actually does work. The fact that it's regressive doesn't make it bad.

[Farmer-Rick]

37. I'm not concerned that it is regressive

I'm concerned that it will just be another rebate for wealthy corporations. And property taxes or wealth taxes are so much simpler.

[applegrove]

4. In Canada you don't pay it on food at the grocery store. If you are poor you get money back

a few times a year.

[Hermit-The-Prog]

6. as regressive as sales tax

A VAT is just a sales tax by another name. It places a higher burden on those who can least afford it.

Income tax can be tailored to distribute the burden more equitably, based on ability to pay.

[Recursion]

10. OK, but they've made VAT-funded social programs work. We've failed to make income tax-funded social

programs work. Maybe we should look to the countries who have gotten it to work for how to do it.

[Cicada]

15. VAT tax can be non regressive

Jan 1 send every person $3000. Or whatever amount causes the VAT tax plus Jan 1 check to cause the system of check plus VAT to not be regressive. Easy solution.

[Anon-C]

44. Right! A VAT is ass-backwards.

And arguing against it is by no means an argument against increasing taxes to pay for social programs.

In addition to much higher income taxes for the rich, taxes on extracted mineral wealth should be increased before a VAT or any other sales tax is considered.

[TheFarseer]

7. No thanks

It sounds something like the "fair tax" I get that its not just on the sale at the end but i dont get how it doesn't discourage economic activity by taxing any process that adds value and i dont get how it's not regressive - but I'm no expert on VAT.

[Recursion]

12. When the rest of the world does something that the US refuses to, what is your usual reaction?

For me, I normally think "we probably are the ones who are wrong here".

[MichMan]

13. Should our candidates for president embrace a VAT then?

For example, at least in the EU, different rates of VAT apply in different EU member states, ranging from 17% in Luxembourg to 27% in Hungary. Buy a new car and pay 21% VAT tax like Belgium for example.


Think that would resonate with voters?

[Recursion]

21. Well, Andrew Yang is proposing a 10% VAT to pay for his UBI program

I'd like it if the other candidates proposed one too. It's a great way to pay for programs.

[Demsrule86]

31. Absolutely not...this would be madness,and we would lose.

[TheFarseer]

23. I did a little research and came to two conclusions

Most average Europeans don't like the VAT because it is regressive and rich folks get around it for all but small everyday purchases.

It will never be gotren rid of because they need the money. It can't be replaced by raising income taxes because that would blow the balance they need to achieve with the other EU countries. I dont get the sense that its the best situation.

[Recursion]

25. It's better than our "solution", which is to just do without the money (nt)

[Cold War Spook]

24. My usual reaction is to study the two situations and then decide.

That is what we were taught in the 50s. Don't decide until you have learned.

[PoindexterOglethorpe]

8. Is VAT the actual funding mechanism for social programs?

I'd like a bit more information here.

[Recursion]

11. We can take the UK as an example

Total VAT receipts:
https://www.statista.com/statistics/284317/united-kingdom-hmrc-tax-receipts-vat/

Total income tax receipts:
https://www.statista.com/statistics/284306/united-kingdom-hmrc-tax-receipts-income-tax/

So in 2016, the UK received £125 Bn ($165 Bn) in total VAT receipts and £181 Bn ($236 Bn) in income tax receipts. In contrast the US government received $1.7 Trillion in income taxes. Per capita, that's $2472 to the UK in VAT and $3579 to the UK in income tax, as opposed to $5151 per capita receipts in the US, not counting Social Security and Medicare levies.

The UK NHS budget is £127 Bn, or nearly exactly what they take in with the VAT. Money is fungible, so you can't say this particular tax pays for this particular program, but those two numbers are not similar by coincidence.

[rgbecker]

42. Gotta ask: Why not include SS and Medi payments? Or does UK collect that separately also?

In other words: What are the totals of UK tax collections compared with US. Are property taxes local as in US? Are there "state"
taxes also?

Just sorting my Apples from the Oranges.

[CrossingTheRubicon]

14. A VAT is regressive. That's not 'left" it is just reality

[Recursion]

20. It works well in the social democracies we keep saying the US should emulate

Or is it just that we, Myanmar, and Greenland happen to have stumbled onto the truth here and the rest of the world is wrong?

[Jake Stern]

16. So called "Tax Reformers" have been pushing the shit for years

Right down to cutting folks a check annually so they can claim it "isnt regressive". They call it the Fair Tax.

Literally the only difference between that and VAT is they want the Fair Tax to replace income tax.

[PSPS]

17. VAT is really a regressive consumption tax, like a sales tax. Income/wealth taxes are the way to go.

[Recursion]

19. Then why do the social democracies rely on them so heavily? (nt)

[Farmer-Rick]

32. Frequently VATs are used as backwards tariffs.

Taking the VATs out when the corporation ships products to other countries making the product more competitive than sales tax countries.

"There are also significant differences in taxation for goods that are being imported / exported between countries with different systems or rates of VAT. Sales tax does not have those problems – it is charged in the same way for both imported and domestic goods, and it is never charged twice.

To fix this problem, nearly all countries that use VAT use special rules for imported and exported goods:

All imported goods are charged VAT tax for their full price when they are sold for the first time.
All exported goods are exempted from any VAT payments.
For these reasons VAT on imports and VAT rebates on exports form a common practice."
https://en.wikipedia.org/wiki/Value-added_tax#Imports_and_exports

I think a wealth tax is much more reasonable and less complicated. And why do I have to pay tax every year on my farm land and car (registration renewals) but NOT on my stocks? Weird.

[Recursion]

33. In the US a VAT would effectively be a carbon tax

And assuming we did a flat rebate like most VAT countries do, the effect would be identical to raising the minimum wage: prices go up, the poorest incomes go up, and we have more tax revenue.

[Farmer-Rick]

36. Do you mean a rebate to the poor or to corporations exporting their products?

And VATs can be used as reverse tariffs so it has that going for it.

But I think a wealth tax would be simpler and easier to implement. We are all use to paying property taxes.

[PSPS]

43. It's a holdover from how european countries financed the first world war.

[gopiscrap]

18. Yup, we were just in Europe and Africa

it works well

[Demsrule86]

30. Really? It seems there were some serious cuts in social programs in France under Marcron and tax

benefits bestowed on the very wealthy and corporations...this while the average french worker has trouble affording food.

[Recursion]

39. Ah, I see you've been listening to Russian propaganda

None of that is true, but there are people who will be happy to sell you a yellow vest online and get you to go scream it at the top of your lungs.

[Demsrule86]

40. Nonsense. You know it is true...and there are protestors also.

[Recursion]

41. No, it's not. Macron didn't cut benefits, and his gas tax

left gas cheaper than it had been a year previously. His welfare reform was to limit the increase in subsidized job payments to the inflation rate.

If you actually listen to the fascist scum out in yellow vests, what they're complaining about is the existence of public housing for brown people.

[Demsrule86]

45. You are comletely wrong.

Macron's reforms hurt the working class ….both poor and middle class.

Macron passed a tax cut on banking investments...the really rich.

Next we have 'reformed' housing which means cuts for the poor.

They want to reform railroads which means cuts for workers

They have reformed labor laws that make it easier to fire people.

Next comes refomr on pensions...it is in the works.

People act like Europe is so great but the truth is they are attempting to screw the middle class and poor everybit as much as this country has. Now consider in the midst of all this 'reform' (cuts) you add a gas tax and of course there is a vat tax which is now payoing for tax cuts for the wealthy.

Those protesting are not fascists but the middlle class and the poor. Sure Le Pen had her slimey crew join up ...it is what she does but she is just using the unrest Macron created with his 'reforms' an attempt to take from the middle class and the poor and give to the rich. To balance a budget on the backs of those who can lease afford it.



https://www.thelocal.fr/20170927/hero-to-the-rich-macron-cuts-taxes-for-wealthy-in-first-french-budget-france

https://www.nbcnews.com/news/world/who-are-france-s-yellow-jacket-protesters-what-do-they-n940016

[pampango]

22. A VAT is regressive but IF it is tied to popular liberal social programs as it is in Europe

the it can be as popular. The FICA tax is regressive (even more than a VAT because the income subject the FICA is capped) but Social Security if, of course, extremely popular.

In a perfect world, the social democracies of Europe would fund social safety net programs only with progressive taxes. Apparently Europeans have accepted that it is not a perfect world and they are willing to pay the VAT as long as it funds social programs. And their countries have progressive income taxes in addition to the VAT.

So the VAT is regressive (like FICA or a sales tax) and is only popular in liberal social democracies because it is tied to popular social programs. I think most liberals would prefer to see funding for a Green New Deal or an improved health care system or fixing our infrastructure come solely from additional progressive taxes on the rich.

But, since we do not live in a perfect world and existing liberal social democracies use a VAT (in addition to higher, progressive income taxes) to fund their infrastructure and safety net programs), we should not be afraid to consider using it ourselves. Republicans will cry 'socialism' not matter what we propose.

[Demsrule86]

28. It would end up being a tax on the middle class and poor...while the rich get away with tax murder..

no thanks.

[Recursion]

29. I don't care. It would pay for universal health care, which we need

I'm guessing the rest of the world does that for a reason, not just out of spite.

[Farmer-Rick]

35. We pay a wealth tax on our land and private cars why not on our stocks and bonds too?

It would/could then pay for universal health care.

[Demsrule86]

38. I am against it.

It will never go through and would simply allow the GOP to demonize us and help the rich out even more.

[brooklynite]

34. Some conservatives love the idea of a VAT...

Why? Because then they can scare people with a "30% sales tax" and demand that it be cut.