Dumb question about Sales Tax:In the EU we have Value Added Tax. Only individuals pay this, businesses don't (as long as the business is VAT registered). My businesses, for example, have lots of bureaucratic VAT obligations i.e. tons of paperwork, but the net result financially is as if there were no VAT. So it seems to me to be just a job-creation exercise for the public sector.What happens with Sales Taxes in the US? Who pays, just individuals or businesses too?P

QuoteOriginally posted by: PaulMaybe it's the other end of the spectrum that's more of an issue? The Black Economy. Is there more potential tax revenue there than at the top end? For example (and this is perfectly sensible, at least for discussion, but suicide for any political party!) tax relief when you pay your cleaner, gardener, etc. Bring them into the proper economy where they pay taxes. It will cost something in the short run but will stop making payment in cash, no questions asked, so tempting.The black economy is a significant issue indeed. One aspect is the obvious, the tax evasion. Coping with tax evasion will help the government lower the tax rates for everybody. The other issue is bringing the black economy into the formal economy will boost at first nominal GDP and every ratio related to it may look better. My only objection is that you start at the opposite end of the spectrum, black economy may mean a lot of things, the tips to a waitress, the compensation for a nanny, a gardener or a prostitute, but it may include multi million dollar bribes too, to government officials for awarding you lucrative contracts. Focusing on the issue of tax evasion, its also the aspect of tax avoidance, which in most times its mere tax evasion dressed up with a veil of legality. When the tax code is full of loopholes that even the dumbest accountant can see, it means either the law makers are retarded and should do another job, or they serve particular interests. Here untill recently, there was no dividend tax, property tax started being effective only if you owned property worth of millions, ESOPs were tax free, there was no capital gains tax for listed securities and a mere 5% tax for selling privately held companies, while there was a flat rate of 20% for football players, actors and singers, the same effective rate for average people like nurses and teachers. Obviously, your gardener and mine dont derive income from such sources...Then its the tax revenues lost by the so called tax optimisation tricks of big banks and big corporations. I read on news lately stories about Apple, Starbucks and Google hiding billions from the taxman. Today i read that at EU level tax revenues lost by evasion and avoidance, exceed the aggregate government deficits. But I think targeting gardeners and prostitutes first, is rather hypocritic. Such people typically spend most of their income, do not pile it up in offshore accounts. At first, one has to close the holes at the tax code, at international level, then cope with the "big" tax evasion, then chase the petty tax evasion. The argument of few from the many, versus, many from the few, is a pseudo-dilema.

QuoteOriginally posted by: PaulDumb question about Sales Tax:In the EU we have Value Added Tax. Only individuals pay this, businesses don't (as long as the business is VAT registered). My businesses, for example, have lots of bureaucratic VAT obligations i.e. tons of paperwork, but the net result financially is as if there were no VAT. So it seems to me to be just a job-creation exercise for the public sector.What happens with Sales Taxes in the US? Who pays, just individuals or businesses too?PVAT is essentially paid by end consumer, but collected gradually as the product moves along the value chain. Apart from a hussle for a business, VAT can be a problem for exporting businesses or businesses whose input VAT has a higher rate than output VAT. In these case the business may end with huge debit balance on its VAT account, essentially lending the government.US sales tax to my knowledge is paid by end consumers too, but its a more complicated and less uniform taxation structure. The same product or service may carry a different Sales tax rate in different states, and on top of this, municipalities have the option to charge additional sales tax on top of State sales tax.

QuoteOriginally posted by: AnthisQuoteOriginally posted by: PaulMaybe it's the other end of the spectrum that's more of an issue? The Black Economy. Is there more potential tax revenue there than at the top end? For example (and this is perfectly sensible, at least for discussion, but suicide for any political party!) tax relief when you pay your cleaner, gardener, etc. Bring them into the proper economy where they pay taxes. It will cost something in the short run but will stop making payment in cash, no questions asked, so tempting.The black economy is a significant issue indeed. One aspect is the obvious, the tax evasion. Coping with tax evasion will help the government lower the tax rates for everybody. The other issue is bringing the black economy into the formal economy will boost at first nominal GDP and every ratio related to it may look better. My only objection is that you start at the opposite end of the spectrum, black economy may mean a lot of things, the tips to a waitress, the compensation for a nanny, a gardener or a prostitute, but it may include multi million dollar bribes too, to government officials for awarding you lucrative contracts. Focusing on the issue of tax evasion, its also the aspect of tax avoidance, which in most times its mere tax evasion dressed up with a veil of legality. When the tax code is full of loopholes that even the dumbest accountant can see, it means either the law makers are retarded and should do another job, or they serve particular interests. Here untill recently, there was no dividend tax, property tax started being effective only if you owned property worth of millions, ESOPs were tax free, there was no capital gains tax for listed securities and a mere 5% tax for selling privately held companies, while there was a flat rate of 20% for football players, actors and singers, the same effective rate for average people like nurses and teachers. Obviously, your gardener and mine dont derive income from such sources...Then its the tax revenues lost by the so called tax optimisation tricks of big banks and big corporations. I read on news lately stories about Apple, Starbucks and Google hiding billions from the taxman. Today i read that at EU level tax revenues lost by evasion and avoidance, exceed the aggregate government deficits. But I think targeting gardeners and prostitutes first, is rather hypocritic. Such people typically spend most of their income, do not pile it up in offshore accounts. At first, one has to close the holes at the tax code, at international level, then cope with the "big" tax evasion, then chase the petty tax evasion. The argument of few from the many, versus, many from the few, is a pseudo-dilema.There is another layer in between nannies and google, and it is all that many professionals (individuals) who make a decent (but not stellar) living without paying taxes. This is typical of Italy, for example, where there are several thousands of plumbers/ electricians/ dentist etc who just do their job and kindly ask you not to request the receipt, in return for a small discount.

Absolutely! Start with the evasion. Interesting info here: http://www.ifs.org.uk/bns/bn09.pdf, about how much raised and how. It looks like income tax, NI and VAT outweigh everything else, so much so it's not worth having many of the other taxes! But even closing loopholes doesn't look like it will have that much impact, other than psychological. It does appear that basically there are so many at the lower end of the spectrum that we can't eliminate taxes on them. But that's why I mentioned VAT, that's a very big one, but businesses don't pay it.P

QuoteOriginally posted by: PaulDumb question about Sales Tax:In the EU we have Value Added Tax. Only individuals pay this, businesses don't (as long as the business is VAT registered). My businesses, for example, have lots of bureaucratic VAT obligations i.e. tons of paperwork, but the net result financially is as if there were no VAT. So it seems to me to be just a job-creation exercise for the public sector.What happens with Sales Taxes in the US? Who pays, just individuals or businesses too?PIn the US, sales tax is paid by consumers for all taxable goods and by businesses only on goods consumed (not resold) by the business. Sales tax is collected by the retailer and appears as an explicit added charge on every bill or receipt.Sales tax is a state and local affair -- there's no national sales tax -- and applies only to sales transacted in-state. The tax rate varies according to the location of the retailer (not location of the end-consumer). That implies that buying something from an out-of-state supplier would have no sales tax. Some (most?) states with a sales tax also have a "use tax" which is intended to be paid by consumers on any goods bought out-of-state but consumed in-state. Consumer compliance on use tax is quite low though and there's a movement to force all companies to start paying sales tax based on the location of the buyer, not the location of the seller. Sales tax is a giant hair ball. For example a retailer on our pedestrian mall pays at least four different sales taxes to: the state, the city, a regional cultural facilities district, and a downtown economic improvement district.

When you complete your VAT form there are various 'boxes' into which you put VAT paid and VAT collected, and other stuff. Am curious to know how big these numbers are for typical businesses, and what would happen if, quite trivially, one were to put a scaling of x < 1 in front of the VAT paid number? PPS Don't get me started on the rules for VAT when you do business with the EU! Quite frankly it's a nightmare, and another reason not to work!

QuoteOriginally posted by: PaulPS Don't get me started on the rules for VAT when you do business with the EU! Quite frankly it's a nightmare, and another reason not to work!There is really no problem if you fill in the forms as one-off and then it's just business as usual. It must be a UK thing. Another reason for being in the EU. The tricky part is e-services and VAT but that's a universal issue...

You don't get letters every few weeks with new VAT rules? You don't have to collect extra information about your clients? New forms to complete? Different rules depending on where the client is? Where the business is done? What type of business? And if the business is over the internet? And fines if you get it wrong? Etc. etc. etc.P

QuoteOriginally posted by: PaulYou don't get letters every few weeks with new VAT rules? You don't have to collect extra information about your clients? New forms to complete? Different rules depending on where the client is? Where the business is done? What type of business? And if the business is over the internet? And fines if you get it wrong? Etc. etc. etc.PNot AFAIK.That sounds awful. I am sure it is for a good cause and keeps a lot of people busy.

The only people in the EU that follow the rules are us Brits!P

For daveangel: More rules for VAT and charities: http://www.hmrc.gov.uk/charities/vat/intro.htm.I've always found the zero rating amusing (in a kind of hysterical way). They are saying: "We aren't going to tax you, we just want to know what you are up to, annoy you with paperwork, and have you know that we can change that VAT rate any time we in the public sector feel like attacking the private sector. As we do quite often, because we are miserable, envious buggers."P

QuoteOriginally posted by: PaulThe only people in the EU that follow the rules are us Brits!PIs this another example of senior members doing things foolishly?

QuoteOriginally posted by: PaulInheritance Tax is another punishment tax, 3bn. A pittance. But a nice earner for lawyers and accountants.PI ve read the link you provided, a 40 percent general inheritance tax is indeed ridiculus. The government pockets the asset value every two generations factoring in some moderate inflation. Also the clause that makes inheritance tax zero if the inheritance takes place at least 7 years before death, seems rather funny. It is photographic for the interests of lawyers, estate planners, accountants, and fortune tellers too. I just wonder whats the representation of those professionals in parliament. Can we structure a product related to (non) longevity risk and inheritance tax?

QuoteOriginally posted by: Anthis It is photographic for the interests of lawyers, estate planners, accountants, and fortune tellers too. I just wonder whats the representation of those professionals in parliament. Rather like the Labour and LibDem MPs who propose a new Mansion Tax on properties worth just a little bit more than their own properties, so they won't have to pay it!That will be another punishment tax, that will bring in tiny amounts.P