FICA

[Supposn]

I don't see how a tax on everything you buy reduces anyone's tax burden.

And VAT taxes are insidious as they add a tax to every part of the production process not just the end sale.

Blues Man, Regarding value added tax, you're entirely wrong. Refer to (19) Value added Tax, (VAT) | US Message Board ? Political Discussion Forum

Value Added Tax, (i.e. VAT) compared to prior conventional sales tax methods.

Unlike any other sales tax method, VAT does not any manner increase prices by additionally taxing the sales taxes levied within previous sales transactions. After the first transaction link of a chain of transactions, given the same tax rate, numbers of prior commercial transactions, and prices for each transaction (excluding the transaction taxes), the total government revenue is less for VAT and greater for the other conventional sales tax methods. That’s due to not taxing the additional costs of prior Vat taxes.

Commercial entities provide to the government and to the purchasers, their VAT paper work that is very similar to what they would provide within other (older) sales tax methods but they subtract the VAT they paid from the VAT they collected and pass only the difference onto the government.

This business-friendly method is particularly beneficial to small businesses because cash flow is among their major problems. Purchasers do not pay VATs upon VATs imbedded within each prior transaction link within a chain of VAT transactions.

Under a VAT system commercial purchasers do not request that their purchases not be documented or the full prices not be revealed (because they deduct the VAT they paid from the VAT they collected (on behalf of the government). VAT tax evasion is more difficult, riskier and less profitable (than evading the older conventional sales tax method). This increases government’s revenues and reduces enforcement expenses.

I’m aware of advantages to VAT compared to other sales tax methods but no disadvantages. Many nations have enacted VAT and/or transformed their prior sales tax method to a VAT but I’m unaware of any nation transforming their VAT to the older conventional sales tax method.

Respectfully, Supposn

 

[Supposn]

I don't see how a tax on everything you buy reduces anyone's tax burden. ...

Blues Man, the proposals'pimary purpose is not to reduce anyone's taxes, but certainly not reduce but rather to some extent increase tax revenues for Social Security retirement and Medicare programs while:

(1) Because the the proposed VAT tax rate doesn't exceed the reduction of employees' FICA taxes, for employees with incomes no greater than the cap on employees' wages subject to 6.1% payroll tax, it doesn't increase the taxes of employees with total incomes of no more than $147,000 in 2022.

1. 
   (2) Because people purchase some things that are not likely to be subject to a general Vat, it will to some extent reduce those employees net taxes. (Payroll-based taxes tax employees' entire wages).

(3) This proposed shifting of some tax revenues from from a payroll-based tax to sales-based tax everyone, (not just employees subject to payroll-based taxes) will have more people and some additionally more net revenue contributing to funding of Social Security retirement and Medicare programs.


(4) The reduction of U.S, employers' portion of payroll taxes, (i.e. reducing U.S. Enterprises), payroll based taxes will to some small extent reduce prices of USA products. That's of some economic benefit to our nation. Additionally, taxing enterprises based upon their payrolls doesn't induce creation of jobs.

Respectfully, Supposn

 

[Supposn]

I retired at age 51 a couple years ago and you would be placing an addition tax on everything I buy.

And you're not helping anyone by just shuffling a tax from a payroll tax to a VAT

Blues Man, the proposals' purpose is not to reduce anyone's taxes, but certainly not reduce but rather to some extent increase tax revenues for Social Security retirement and Medicare while to some small extent increasing the purchasing power of wage earners with incomes almost entirely from wages and those wages being no greater than the wage-cap.
They and their dependents are the overwhelming majority of USA's population. The proposal's purpose is to net improve USA's net aggregate economy.

If you're now retired and your income's almost entirely due to wages and social security retirement benefits and your wage income's not greater than the wage-cap, you would not be financially harmed, but to some extent you and your dependents would net benefit if this proposal would be currently in effect.

But I don't know and wouldn't presume to ask what's the proportional mix and sources of your current incomes. Respectfully, Supposn

 

[Blues Man]

Blues Man, Regarding value added tax, you're entirely wrong. Refer to (19) Value added Tax, (VAT) | US Message Board ? Political Discussion Forum

What Is a Value-Added Tax (VAT)?

Value-added tax (VAT) is collected on a product at every stage of the supply chain where value is added to it, from production to point of sale.

www.investopedia.com

Value-added tax (VAT) is a consumption tax on goods and services that is levied at each stage of the supply chain where value is added, from initial production to the point of sale. The amount of VAT the user pays is based on the cost of the product minus any costs of materials in the product that have already been taxed at a previous stage.

 

[Blues Man]

Blues Man, the proposals' purpose is not to reduce anyone's taxes, but certainly not reduce but rather to some extent increase tax revenues for Social Security retirement and Medicare while to some small extent increasing the purchasing power of wage earners with incomes almost entirely from wages and those wages being no greater than the wage-cap.
They and their dependents are the overwhelming majority of USA's population. The proposal's purpose is to net improve USA's net aggregate economy.

If you're now retired and your income's almost entirely due to wages and social security retirement benefits and your wage income's not greater than the wage-cap, you would not be financially harmed, but to some extent you and your dependents would net benefit if this proposal would be currently in effect.

But I don't know and wouldn't presume to ask what's the proportional mix and sources of your current incomes. Respectfully, Supposn

So increasing taxes on people who lo longer work is the way to increase SS revenue?

 

[Supposn]

So increasing taxes on people who lo longer work is the way to increase SS revenue?

 

[Supposn]

So increasing taxes on people who lo longer work is the way to increase SS revenue?

Blues Man, the proposal’s a small reduction of net taxes paid by employees and their dependents with incomes no greater than the wage-caps upon portions of employees’ payroll-based taxes and would consequentially in effect be a small increase of theirs and their dependents purchasing powers.

The program does not effectively reduce the purchasing powers of Social Security recipients and their dependents.
Due to the proposal’s reduction of employer’s payroll-based taxes, it reduces net taxes paid by enterprises, which has some beneficial affects upon our economy.

Other than the afore mentioned employees, social security recipients and all of their dependents, (which are the overwhelming majority of USA's population), this proposal somewhat reduces the purchasing powers of all other individuals; but to some extent all of our nation’s population gain at least some indirect benefits from any improvement of our nation’s economy.

That this proposal's not of benefit to you may be regrettable, but Medicare and Social Security is of net benefit to our entire economy. It should be paid for by even a greater tax base than only employees and employers.
Respectfully, Supposn

 

[Blues Man]

Blues Man, the proposal’s a small reduction of net taxes paid by employees and their dependents with incomes no greater than the wage-caps upon portions of employees’ payroll-based taxes and would consequentially in effect be a small increase of theirs and their dependents purchasing powers.

The program does not effectively reduce the purchasing powers of Social Security recipients and their dependents.
Due to the proposal’s reduction of employer’s payroll-based taxes, it reduces net taxes paid by enterprises, which has some beneficial affects upon our economy.

Other than the afore mentioned employees, social security recipients and all of their dependents, (which are the overwhelming majority of USA's population), this proposal somewhat reduces the purchasing powers of all other individuals; but to some extent all of our nation’s population gain at least some indirect benefits from any improvement of our nation’s economy.

That this proposal's not of benefit to you may be regrettable, but Medicare and Social Security is of net benefit to our entire economy. It should be paid for by even a greater tax base than only employees and employers.
Respectfully, Supposn

Then you increase the cap.

You don't seem to realize that a 4.5% VAT will actually do to the economy.

You think prices will only rise by 4.5% at the end sale and you would be wrong.

 

[Supposn]

Then you increase the cap.

You don't seem to realize that a 4.5% VAT will actually do to the economy.
You think prices will only rise by 4.5% at the end sale and you would be wrong.

Blues Man, within a 4.55% conventional sales tax system, the final purchaser within the chain of transactions is likely to be paying substantial embedded sales taxes in addition to the explicitly stated 4.55% sales tax. The aggregate total of those embedded unaccounted sales taxes differs for different products.

Within conventional sales tax systems, enterprises within chains of sales transactions are required to forward 100% of their collected sales taxes to the government along with their paperwork.

Enterprise's compliance paperwork for conventional or VAT are of similar complexity, (which is much simpler than most, (if not all) income tax systems).

Within a VAT system, enterprises are required to forward only the DIFFERENCES between the sales taxes they paid and those they collected, which expedites their their cash-flows. I've often been confronted by critical cash flow problems. I suppose that's a particularly typical challenge among small businesses.

Your provided link, Value-Added Tax (VAT) Definition (investopedia.com) , doesn't attribute great importance to the fact, unlike the older conventional sales tax systems, a 4.55% VAT system would increase products prices within every link of a commercial transaction chain by no more than 4.55%; there are no embedded additional sales taxes within a VAT system of sales taxes. Respectfully, Supposn

 

[Supposn]

Then you increase the cap.

You don't seem to realize that a 4.5% VAT will actually do to the economy.
You think prices will only rise by 4.5% at the end sale and you would be wrong.

Blues Man, I don't understand what point you had in mind when you began your post with the line, “Then you increase the wage cap”?

I'm among the proponents for eliminating the wage-cap within any wage or payroll-based taxes. Respectfully Supposn

 

[Blues Man]

Blues Man, within a 4.55% conventional sales tax system, the final purchaser within the chain of transactions is likely to be paying substantial embedded sales taxes in addition to the explicitly stated 4.55% sales tax. The aggregate total of those embedded unaccounted sales taxes differs for different products.

Within conventional sales tax systems, enterprises within chains of sales transactions are required to forward 100% of their collected sales taxes to the government along with their paperwork.

Enterprise's compliance paperwork for conventional or VAT are of similar complexity, (which is much simpler than most, (if not all) income tax systems).

Within a VAT system, enterprises are required to forward only the DIFFERENCES between the sales taxes they paid and those they collected, which expedites their their cash-flows. I've often been confronted by critical cash flow problems. I suppose that's a particularly typical challenge among small businesses.

Your provided link, Value-Added Tax (VAT) Definition (investopedia.com) , doesn't attribute great importance to the fact, unlike the older conventional sales tax systems, a 4.55% VAT system would increase products prices within every link of a commercial transaction chain by no more than 4.55%; there are no embedded additional sales taxes within a VAT system of sales taxes. Respectfully, Supposn

You need to learn what a VAT is.

If raw materials are bought for $100 and then processed to be sold at $200 there the VAT is applied to that additional value over the raw material so the person buying the processed material pays the $200 plus the VAT on the $100 added value.

That person then refines what he bought or uses it in a different product which will be sold at $400 so the nest person in the chain pays the $400 plus the VAT on the $200 added value etc

It is not like a sales tax where only the end purchase it taxed but rather it is an incremental cumulative tax that increases the price at every stage of production and all those price increases along the way add up

 

[Supposn]

You need to learn what a VAT is.

If raw materials are bought for $100 and then processed to be sold at $200 there the VAT is applied to that additional value over the raw material so the person buying the processed material pays the $200 plus the VAT on the $100 added value.

That person then refines what he bought or uses it in a different product which will be sold at $400 so the nest person in the chain pays the $400 plus the VAT on the $200 added value etc

It is not like a sales tax where only the end purchase it taxed but rather it is an incremental cumulative tax that increases the price at every stage of production and all those price increases along the way add up

Blues Man ... Your provided link, Value-Added Tax (VAT) Definition (investopedia.com) , doesn't attribute great importance to the fact, unlike the older conventional sales tax systems, a 4.55% VAT system would increase products prices within every link of a commercial transaction chain by no more than 4.55%; there are no embedded additional sales taxes within a VAT system of sales taxes. Respectfully, Supposn

You need to learn what a VAT is. .. It is not like a sales tax where only the end purchase it taxed but rather it is an incremental cumulative tax that increases the price at every stage of production and all those price increases along the way add up

Blues Man, you're mistaken. Yes, the prices, (i.e. the values) of goods and services products increase as each enterprise contribute their applied supplies, capital, and labor to a product as moves through its commercial chain.

Unlike the old conventional sales taxes, within a VAT system, each enterprise within the commercial chain of transactions subtracts the VATs they paid, from the VATS they collected, and forward only the differences to their government. If the VAT rate's 4.55%, the 4.55% tax levied upon the final purchaser represents the government's entire tax revenue derived from that product after it's moved through its commercial chain.

It is effectively a sales tax where only the tax paid by the final purchaser, is government's total tax revenue derived from that product.

Note if the final purchaser of a product's an enterprise, that consumes the product itself, that final product's cost to the final purchaser becomes a component of cost of whatever that enterprise produces. VAT's the method for administrating sales taxes. Respectfully, Supposn