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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: JDN who wrote (84788)	11/8/2004 7:59:18 AM
From: Lane3	Respond to of 793843

You keep talking about your INCOME but your EXPENDITURES include your INCOME plus what you BORROW. I started out stating the assumption that our expenditures are less than our income. Partly I wanted to simplify, but partly it's because it's true. In any given year we may spend more than we earn but over time we have to live within our income or declare bankruptcy. There aren't enough bankruptcies in the country to make that a factor in this simplified discussion we're having. So it seems reasonable to me to assume that, while one individual may be extending himself in one year and spending more than he earns, in another year he will be spending less and that different individuals are on different cycles of shopping and paying off the MasterCard so it would more or less average out, well enough for the purposes of this discussion. In any event, the VAT is captured at the time of manufacture so it would be the manufacturer's anticipation of your purchase that would drive the collection of the tax, not your actual purchase. If you buy a refrigerator, the price of the refrigerator includes the VAT. You can pay cash for the refrigerator or you can put it on your MasterCard and pay for it in thirty days or over years and years. The government already has its money. It collected the VAT during production of the refrigerator, not upon the sale of the refrigerator. You are borrowing money from MasterCard on both the refrigerator and the VAT. So I don't see how the financing arrangements or even the timing of your purchase are a factor in the VAT rate. It still seems to me intuitively obvious that, to raise an equivalent amount of tax money, the VAT rate would have to be at least equal to the flat income tax rate, which would be upwards of twenty percent. I don't see any way that could not be true.