VAT: The Nightmare Tax Gets Proposed, Again » Brian Writes For PJ Media

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?


About Brian of London

Brian of London is not the messiah, he's a very naughty boy. Since making aliyah in 2009, Brian has blogged at Israellycool. Brian's interests include electric cars, world peace and an end to world hunger. Besides blogging here, Brian of London now writes at the Times of Israel. Brian of London also hosted Shire Network News

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  • Shy Guy

    If you were wondering about the picture of Bar Refaeli, here’s the answer. What would you illustrate this dull tax stuff with then?

    Catherine Ashton.

    • Brian of London

      Don’t blaspheme around here.

  • Jim from Iowa

    You’re right, Brian. Taxes are way too boring a subject. So let me ask this question instead. Today is Leap Day, the one additional day added every fourth year to make 2012 a leap year. Does the Jewish calendar have leap years? I’m not sure about this, but I believe the Chinese have a leap year every time it’s the Year of the Frog in their system.

    • ziontruth

      “Does the Jewish calendar have leap years?”

      We have such years that get a month added, not just a day. You could call them leap years, but the proper term is “intercalation,” and the Hebrew term is literally translated as “impregnation”—a year with 13 months is a shanah me’ubberet or “impregnated year.”

      This Hebrew calendar year happens to be a shanah p’shutah, meaning “simple year,” having 12 months. This month is Adar, which on an intercalated year has a double—First Adar (Adar Alef) is followed by Second Adar (Adar Bet).

      An ordinary year has a few days over 350, while an intercalated year has a few days over 380. The exact number depends on the variable months of Heshvan and Kislev, which don’t have a fixed number of days like the other months, but can have either of the two possibilities of 29 or 30 days; the number of days is set to prevent Rosh Ha-Shanah (1st of Tishrei, the first day of the year) from falling on a Sunday, Wednesday or Friday, and Passover (15th of Nisan) from falling on a Monday, Wednesday or Friday. The calendar is lunisolar, corresponding to the phases of the moon (so the 15th of a Hebrew month will always have a full moon), but unlike the Islamic calendar, it is intercalated to bring it in step with the solar seasons.

      Alright, I hope you now don’t prefer talking about taxes instead. For what it’s worth, I find this subject very interesting.

      • Jim from Iowa

        That was a thorough, if not downright exhausting explanation. Thanks for taking the time.

        • ziontruth

          “That was a thorough, if not downright exhausting explanation.”

          “Exhausting” or “exhaustive”? There’s a difference in meaning, though not always in practical results, between those two words. ;)

          “Thanks for taking the time.”

          You’re welcome. I don’t know everything there is to know about the subject, because it really is complex. For example, I don’t know why it is that Passover is prevented from falling on a Monday, Wednesday or Friday. I think z303 is more knowledgeable about those things.

          • Norman B.

            It’s done to prevent Yom Kippur from falling on a Friday or Sunday and Purim from falling on a Saturday. In fixing the Jewish calendar, the Talmudic sages concluded that the earth revolves around the sun around 1200 years before Copernicus.

            • ziontruth

              Thanks for the explanation, Norman. It’s obvious to me why prevent Yom Kippur from falling on a Friday or Sunday and Purim from falling on a Saturday, so that clears it up.

              “In fixing the Jewish calendar, the Talmudic sages concluded that the earth revolves around the sun around 1200 years before Copernicus.”

              Are you sure? I thought calendar reckoning was the same whether you’re a geocentrist or a heliocentrist. At any rate, the Copernican idea and Galilean controversy never caused the furore they did in the Christian world. The same cannot be said, alas, of Darwin’s Theory of Evolution. What a waste of energies this controversy is!

              • Norman B.

                I recommend to you the book “The Coming Revolution: Science Discovers the Truth of the Bible” by Rabbi Zamir Cohen, which has been published in both Hebrew and English, in which the author delves into these matters. I learned that the medieval sage Nachmanides anticipated much of Einstein by almost 700 years.

                • ziontruth

                  Thanks, Norman, but the question of the relationship between science and religion doesn’t hold my interest. When somebody asks me what I think of evolutionary theory, my reply is, “I accept it to avoid a waste of time and energy fighting over what I think is an issue of no importance.”

                  It’s archeology a Jewish believer should keep watch over, not the natural sciences. In his Kuzari, Rabbi Yehudah Ha-Levi (ZYA) bases his argument for the Jewish faith on the Exodus from Egypt, not on the teleological argument (which can at best prove there is an intelligent designer of life, but nothing beyond that about that designer (or designers, in the plural)).

                  • juvanya

                    Ive gone from skepticism to fully believing the Exodus story. I think Sinai is located in northwest Arabia and that area is inaccessible, so it cant be verified. SO thats why it seems like there is no proof.

  • STV

    Thinking about it, I’d much rather have the full price with tax than a price without the tax on an item as is done in the parts of the USA I’ve visited.

    There’s nothing worse than getting to the till and finding that the item costs more than you thought.

    On the business side, governments will always put together a tiered tax system that collects directly and indirectly and businesses in the U.S essentially do fill the role of ‘unpaid tax-man’ through the state sales tax although obviously this is only applied at retail.

    You are right though, VAT is a massive impediment both to big and small businesses. Start-ups though are especially fragile, it’s difficult enough anyway without the additional burden of tax.

    It’s often said that about 80% of start-ups fail, I would say that’s an underestimate. Now that’s not all down to the tax system but with the challenges faced with growing competition worldwide it does seem like Western governments are sleepwalking right into another economic disaster.

    There is certainly a case for better ‘hands off-hands on’ assistance from the government ranging from tax-relief to international business treaties.

    They can’t watch everything slip away to China and expect everyone in the UK to be employed by Tescos.

    • juvvanya

      You dont want to know how much the thugs are stealing from you?

  • juvanya

    @Shy Guy
    I saw Rabbi Kelemen speak live. Very good lecture.

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