Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : The Trump Presidency -- Ignore unavailable to you. Want to Upgrade?

To: Katelew who wrote (4869)	1/5/2017 3:17:05 PM
From: TimF	Read Replies (1) \| Respond to of 358878

It seems your right about that specific point - If you import goods that you’ve bought from non-EU countries they’re normally charged at the same rate as if they had been supplied in the UK. gov.uk So lets look in to this a bit. Standard VAT rate in EU countries seems to be 15 to 25% ricksteves.com (Switzerland isn't in the EU. They are in the EFTA if you count them make it 8 to 25%. 2nd source gives me 19 to 27% en.wikipedia.org Highest sales tax in the US (as of a year and a half ago at least) seems to be 12 percent combined state and local. Highest state only seems to be 9.46. taxfoundation.org taxfoundation.org So good sold in the EU the tax is 15 to 27% (covering ranges from both sources in full) Sold in the US the tax is 0 to 12%. Difference of 3 to 27%. Lets break it down a bit more. I'll use 20% for Europe and 5% for the US for simplicity sake. Also I'll assume the tax doesn't reduce the pre-tax price, not a safe assumption but I'm not writing an economics paper here, just an SI post, some simplifying assumptions are needed to get anywhere. $100 good. Produced in the EU sold in the EU, after tax price $120 Produced in the US, sold in the EU, after tax price $120 Produced in the US, sold in the US, after tax price $105 Produced in the EU, sold in the US, after tax price $105. In each country of sale the tax affects the sale the same regardless of the country of origin. So it still doesn't seem to be a trade barrier OTOH the fact that the good is more expensive in Europe would tend to reduce demand there relative to demand in the US, and if your shifting demand to the US, it would tend to shift the balance of trade towards the European country. But on the gripping hand other taxes besides sales tax and VAT also tend to increase the price of goods even if not as directly, and it seems pretty silly to call higher taxes a trade advantage, as high taxes reduce competitiveness. I guess I have to come down on the side that says its not a trade barrier.