UK Emergency Budget

[KrazyHorse]

VAT as it is known in Britain was introduced as a progressive tax- a tax on luxuries. By extending it to nearly all sales goods its end results became regressive- anyone living hand to mouth gets shafted, while the old money who can lock estate up for generations can simply wait for a more favourable tax regime.

Now this is an actual valid objection....

On the other hand, it's more difficult to shift consumption than, eg to shift the realization of capital gains

[Ben Kenobi]

No matter how you look at it, poor people will at MOST be able to pay the exact same proportion of VAT as rich people, but realistically they'll always have a higher burden.

Why would this be the case?

Poor people can't cut back on their expenses?

I'd rather have a 20 percent VAT than income tax. That way I get my cheque's full value.

[Hauldren Collider]

But the fact that it is easier to enforce than an income tax means that, if I understand correctly, we'll probably still get a lot less tax dodging.

And the people who conspicuously consume will get hit hardest as opposed to those who make the money they earn available for loans

EDIT: Wow BK is retarded. VAT != free lunch

[Bugs ****ing Bunny]

Poor people can't cut back on their expenses?

No.

They're poor.

Durp.

[Hauldren Collider]

Nah, I think poor people could make do with less.

Those rotten poor people, they spend so much and waste all that money! herp derp

[Hauldren Collider]

Actually there is something tangential to what Ben Kenobi said that makes VATs attractive politically. Idiots like him will think they're getting paid more, maybe we can use this to raise support for VATs

[Ben Kenobi]

EDIT: Wow BK is retarded. VAT != free lunch

It is if your spending is less than 80 percent of your income.

Say I get paid 1500 a month. That's 250 dollars in taxes, so I would get 1250 to spend after taxes.

Say there was a 20 VAT on 1500 a month. I get a cheque of 1500 dollars. I would have to spend 1250 dollars a month in order for my payments due to VAT to equal the tax bite.

Now say I take that 1500 a month, and I pay 300 for rent, 200 for everything else. That leaves me 1000 in the bank, and paying a VAT of 100 bucks.

I end up 150 bucks to the good.

[Hauldren Collider]

[Bugs ****ing Bunny]

It is if your spending is less than 80 percent of your income.

Say I get paid 1500 a month. That's 250 dollars in taxes, so I would get 1250 to spend after taxes.

Say there was a 20 VAT on 1500 a month. I get a cheque of 1500 dollars. I would have to spend 1250 dollars a month in order for my payments due to VAT to equal the tax bite.

Now say I take that 1500 a month, and I pay 300 for rent, 200 for everything else. That leaves me 1000 in the bank, and paying a VAT of 100 bucks.

I end up 150 bucks to the good.

Now repeat the exercise saying you get $300 a month, and the absolute bare minimum you need to spend to avoid dying of exposure and/or malnutrition is $300.

[Bugs ****ing Bunny]

Durp.

[Ben Kenobi]

The numbers work. why wouldn't I want an extra 150 bucks in my pocket every month.

[Hauldren Collider]

That's not what is retarded about what ben said.


HE THINKS HE WON'T PAY TAXES ON HIS SAVINGS.

Ben,

you're going to SPEND those savings someday aren't you? Otherwise you've just been taxed your savings in their entirety.

[Asher]

And they will pay VAT on that larger amount when it gets spent. I don't understand your objection here.

But in many cases it won't get spent. It goes into further investments, inheritance for the kids who live off dividends, investing/purchasing property in more favourable tax climates, etc.

I'm not inherently opposed to VAT, I'm just making the case for why it's widely considered a regressive tax. And I think 20% is a bit steep is all. I'm used to 5-7% in GST only.

[Hauldren Collider]

It does get spent though. That money doesn't just sit in a pile. When you invest it, it gets spent. That reduces the value of the stocks, presumably, so the cost gets passed onto the investor somehow, doesn't it?

NB: I am a noob at economics if I'm wrong please pwn me

[Asher]

It does get spent though. That money doesn't just sit in a pile. When you invest it, it gets spent. That reduces the value of the stocks, presumably, so the cost gets passed onto the investor somehow, doesn't it?

NB: I am a noob at economics if I'm wrong please pwn me

This is only true in theory where the money never leaves a tax system with a systematically applied VAT. It also assumes the money is going to be spent, not invested where people then live off the dividends. And yes, you pay tax on the dividends you get out of it -- but the fact that the payment to the government is deferred for people who have the means means it does not proportionally impact them as it does the poor.