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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: TideGlider who wrote (98725)	1/20/2011 4:08:32 PM
From: TimF	Respond to of 224858

The government could confiscate their wealth for tax evasion if their services weren't taxed. They could also go after them for income tax evasion now, since they don't pay tax on their income. I was concerned only with the fortunes they spend on goods and services being exposed the the VAT. It is a start. Not necessarily. The total tax revenue from the prostitution industry won't necessarily be any higher. Right now they evade the income tax, after this they evade collecting the VAT. On the surface you might say that "well they will pay tax, when before they didn't", which is in a sense true, but it doesn't mean the tax impacts them to a greater degree. Right now. The John pays income tax on his salary, then he takes X money and pays the prostitute or pimp, then they buy something. Change to a VAT, the john pays no income tax, then they take X money to pay for sex, that transaction also doesn't get taxed, then the prostitute or pimp buys something with a tax on that transaction (assuming they are making a legal purchase and not buying drugs, or buying ordinary items from a tax evader). Either with the income tax or the VAT, the money is supposed to be taxed twice (two instances of income tax, or two instances of sales tax/VAT), but with the tax evasion it only gets taxed once. Unless the VAT pulls in more income generally it may not pull in any more from the sex industry. You might argue well with the income tax the john pays, with the VAT the pimp pays, but who you officially assign the tax burden two is not necessarily the person really effectively paying it. It depends on the elasticity of demand for the different sides of the different transactions. Taxing a supplier might burden the supplier more, or it might burden the purchaser more. No easy way to tell for sure, you could either guess or just assume that shifting who officially pays the tax actually doesn't change the real tax burden much for either. With a reduced income tax the johns have more money to spend, when they go to spend it on most things they have to pay taxes, but not when they spend it on a prostitute. That would tend to make sex relatively cheaper, except to the extent that extra demand is created the extra demand could jack prices back up again, and to the extent that the prostitutes and pimps have to shell out more, they may be able to increase their prices, putting the effective burden back on the john, just as it is with the income tax.