Latest posts by Brian of London (see all)
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My latest article in PJ Media is more entertaining than a funeral! It’s more exciting than a trip to the dentist. It’s a first hand account of how Value Added Tax works. I know, I’m spoiling you all with this stuff. Shhh don’t tell anyone but I think I wrote the whole article without mentioning Islam! You have to read the whole thing at PJ Media » VAT: The Nightmare Tax Gets Proposed, Again but here are the first four paragraphs to “hook” you.
For years politicians in the U.S. have floated the idea of a national sales tax modeled on the European Value Added Tax to raise more federal funds. Usually this is couched in terms of reducing income taxes (personal or corporate) to replace them with a tax on consumption because this is somehow more “fair”: let Americans keep more of what they earn and only tax when they spend. Soon after Obama’s election, his team floated the balloon and almost as quickly pulled it back down. But it keeps coming back: here is former South Carolina Senator Fritz Hollings in the Huffington Post calling to cancel the 35% corporation tax and to replace it with a 6% VAT scheme. He seems to think that just because the rest of the world has this, especially Europe, it can’t be all that bad.
That might seem clever — after all, 6% is less than 35%, right? — but there is a hidden cost to VAT that is paid by both profitable and unprofitable businesses. And remember, before almost any startup makes a profit, it makes a loss. VAT doesn’t care about profitability.
So what does VAT mean in Europe (or more precisely, “Credit Invoice VAT”)?
If you’ve ever traveled to Europe you might have come across VAT. I say “might” because unless you bothered to ask, VAT was mostly hidden from you with a cosmetic sleight-of-hand forcing retailers to only display prices after the tax is applied. Your hotel bill will have separated the VAT out if you checked it carefully. It’s also possible you were offered a way to reclaim VAT on larger purchases in tourist spots.
If you were wondering about the picture of Bar Refaeli, here’s the answer. What would you illustrate this dull tax stuff with then?