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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Metacomet who wrote (209554)	11/26/2012 8:43:22 PM
From: cosmicforce	Respond to of 540884

VAT isn't typically the same as a sales tax - it covers both goods and services. It is pretty hard to skip out on that - if you buy something, build it, clean it, sell it, service it, repair it, etc. the product or service is covered at the delivery end by the person or company that benefits from it. Only direct materials are not covered. If you think about all the ways that people can evade taxes, the VAT tends to catch more than the other methods. So if an aircraft company buys something OTHER than parts for the airplane, they pay VAT. Buildings built would be taxed on the materials bought, but not the value of the building after it is built. The tenant would be taxed on the rental (a service) or lease (a service). Question - with a flat tax on income - what is the definition of income? What if I buy parts from outside of the country from a wholly owned foreign unit at an artificial markup? You could have companies that have US units that are break even but have income in the Bahamas or some other place where the tax rate is low (or zero). Corporate taxes will be hard to compute under a flat tax without a more transparent and open accounting scheme - so unless that was in place privately held companies would be at a competitive advantage to public companies. IMO.