Post Ax9pLGH43T43tedGRE by pmdj@mstdn.social
(DIR) More posts by pmdj@mstdn.social
(DIR) Post #Ax9lBf2eiOqm023k9I by mntmn@mastodon.social
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did i get this right? today i really realized that there is really no VAT (value added tax) in the US (because there is a sales tax system?) and so if you imported products from EU countries (example) you don't have to pay any import VAT. this only leaves the special excise tax (gasoline, cigarettes, alcohol?) and tariffs. as a german citizen i always have to pay 19% import VAT to my govt when i import something from the US, so it's mind boggling that this was not an issue for USians so far
(DIR) Post #Ax9lKm2W4DS4JDL6sC by aesthr@wandering.shop
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@mntmn Why would it be an issue for them? As an import-heavy economy it's preferable to pay less on import, and the shops who ship to the EU don't have to deal with it either because its handled on the receiving end.
(DIR) Post #Ax9lSiOVVJNdJtPcSO by mntmn@mastodon.social
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now EU and US informally agreed on 15% "ceiling" for import tariffs to the US. i realize now that this is actually less than most VAT rates in the EU. am i missing something? at the moment it looks like this ceiling is maxed out for all EU->US imports but i wonder if this will change over time. so if i understood all of this right you'll have to pay 15% of the customs invoice price on top if you import an MNT product to the US? or is there already a list for exempted products?
(DIR) Post #Ax9lZXO6p9OvD9Tm40 by mntmn@mastodon.social
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@aesthr yeah but the trump admin doesn't like being import heavy, they see it as a "trade deficit" and thus their idea of the tarrifs is to "counterbalance" this
(DIR) Post #Ax9lcXDvtHmLZS9H1c by gilesgoat@toot.wales
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@mntmn I am no expert but don't they have sales tax that very from state to state when you sale/buy anything ?
(DIR) Post #Ax9lcYkaDNUSJ0QrYW by mntmn@mastodon.social
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@gilesgoat yes, as i said, sales tax system. but this does not apply to imports, and is as you said not federal.
(DIR) Post #Ax9lggGIEHN6lCEHsu by wolf480pl@mstdn.io
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@mntmn but if you're a store in Germany, and you sell the stuff you imported to consumers, they pay VAT to you, and you deduct the VAT you already paid on import from the amount you have to transfer to the govt, right?And if you're a store in the US, I magne you still have to charge the sales tax on imported goods, and forward that to the govt, and you can't deduct import VAT cause you didn't pay any?I think it'd make sense if it worked like that.
(DIR) Post #Ax9lhcdhBQYPoZcnPk by Charles@gascoigne.social
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@mntmn Yup. Consumption taxes have been a bugbear for the pro-tariff crowd in the US for a while. Many of their states charge sales tax only if the delivery destination is in-state — the equivalent of border refunds of VAT/GST. But they don’t collect on import as most VAT/GST countries do. If their federation was better coordinated they could fix this, but their sales tax works at the state and even local level.That said, I think 15% is higher than almost all their sales taxes.
(DIR) Post #Ax9llgTSro6WromBSC by mntmn@mastodon.social
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@aesthr and just to clarify, by "issue" i actually meant that US citizens didn't have to worry about paying a 19% tax on top of their online orders from abroad yet, unlike us EU citizens. i.e. it might be a new and suprising thing
(DIR) Post #Ax9mLdWNK7ri8KHTxA by mntmn@mastodon.social
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thinking further, these tariffs are understandable as retribution for our import VAT but there is a big difference in that _companies_ in the EU don't have to pay this VAT (they get it refunded). but US companies importing i.e. german parts will also have to pay the tariffs, right? so it will put US companies at a disadvantage in terms of importing global parts, which seems like a design error
(DIR) Post #Ax9miZ387DOovPXCnA by mntmn@mastodon.social
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@wolf480pl ah that's a very good point. would be interesting to look at the financial aspects of this model vs the "vat included" model
(DIR) Post #Ax9mpNcV0aR7VJKPVg by pndc@social.treehouse.systems
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@mntmn American taxpayers are supposed to declare such things on their tax return. (Certainly out-of-state purchases, and I assume imports too.) Approximately nobody does this, of course.
(DIR) Post #Ax9mpOUjkvp0DWhj3A by mntmn@mastodon.social
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@pndc so they would have to pay sales taxes if they declare imported goods or...?
(DIR) Post #Ax9n0OkFANSSB7CjuC by wolf480pl@mstdn.io
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@mntmn From what I've heard, it's a mess. Some states have 0% sales tax, some have nonzero. The rules on which transations the sales tax applies to are a mess, and it's not deductible, so some products are taxed multiple times, eg. there's sales tax on the materials used to make them and then another sales tax on the final product.
(DIR) Post #Ax9nP3hcXQrg9kjjay by guigsy@mstdn.social
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@mntmn VAT isn't a tariff. For most products, you've got a long chain of companies from the point of resource harvest, through various sub-component manufacturers, the assembly and distribution. At each stage, they change VAT when they sell to the next company. But they claim back what they paid from their suppliers. So each company is only taxed on the value they add at each step. Unlike a sales tax or a tariff, it doesn't place a burden at a single point, or disadvantage external competitors.
(DIR) Post #Ax9nVZAcSGW5UOP5FI by jelte@mastodon.nl
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@mntmn Is sales tax that different from VAT in practice (apart from percentage)? I thought the only real difference was that when advertising to consumers we have to include it in the price from the start, and in the US it's not added until you're at the register/checkout.
(DIR) Post #Ax9nbUNlAa5oNQNGBE by joborg@mastodon.social
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@mntmn Neither VAT nor sales taxes discriminate against imported goods. Tariffs do.As you say there is a direct import ”loophole” that avoids paying sales tax, but sales tax is due if the US importer sells the imported goods to a customer (in the same state).
(DIR) Post #Ax9nvLYdglEYndvpXk by mntmn@mastodon.social
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@guigsy i know! i mean, thanks for another succinct perspective. but i believe that the tariff deal with the EU is meant (among other things) as a blunt instrument vs EU import VAT for consumers. and as someone who is exporting a lot to the US (me) i am trying to put myself in the perspective of my customers who don't have much experience yet with paying a markup on imports
(DIR) Post #Ax9o43PQXAiv7Rm69g by mntmn@mastodon.social
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@joborg ah yes, that's true @ discrimination. just how it is implemented at the moment, there's a new flat rate of 15% for almost all imports to the US from the EU (i'm sure this will be adjusted later and become more complicated though)
(DIR) Post #Ax9oABmyI7LWqViGbw by pmdj@mstdn.social
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@joborg @mntmn Doesn't sales tax discriminate against both goods imported for resale by local businesses and locally produced goods, versus direct imports from abroad? With tariffs on top, imports by local retail businesses still have a disadvantage compared to direct imports, right?
(DIR) Post #Ax9oACabJb2rKQvty4 by mntmn@mastodon.social
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@pmdj @joborg that's also how i understand it.
(DIR) Post #Ax9oLwm7wApVkzvO0O by pmdj@mstdn.social
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@mntmn @joborg As far as I'm aware, there's some extra complexity around every US state having its own sales tax rules, including on "imports" from out-of-state. Either way, if the US genuinely wanted to level the playing field, they'd need to fix the sales tax model, because it's effectively a tariff on local companies.
(DIR) Post #Ax9oTQQu4LYNlXYzLM by mntmn@mastodon.social
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@pmdj @joborg this sounds spot on, and is probably not done because it would require cooperation between federal and state govts?
(DIR) Post #Ax9oW8wbY2jaOVgg52 by me_@sueden.social
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@mntmn I guess this is the way to get an exemption… https://www.theverge.com/news/737757/apple-president-donald-trump-ceo-tim-cook-glass-corning
(DIR) Post #Ax9pLGH43T43tedGRE by pmdj@mstdn.social
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@mntmn @joborg Trump himself probably doesn't actually understand it; nor would the answer that the foreign-invented concept of VAT is actually more elegant and fair be palatable. In the end, the tariffs strike me as a backdoor for making consumers pay more taxes without hitting the wealthy, and while also claiming to be lowering taxes. Plus it's a great tool to keep everyone's attention on him and his tariffs and away from the fascism.
(DIR) Post #Ax9q8u3KwoyfSPslNI by mntmn@mastodon.social
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@pixx right, this inner logic makes sense. sigh. i guess economists agree that it's an unrealistic plan though and the big corps are currently trying to sit it out and hoping to make it until another admin change
(DIR) Post #Ax9qJI1qf0RMiI8fSq by pmdj@mstdn.social
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@mntmn @joborg (To be clear, I don't think the EU implementation of VAT is a panacea. The situation for collecting VAT on digital "goods" sucks, and is quasi-prohibitively complex for small business. The fees on import VAT collection by couriers are awful, especially when they ignore requests for direct reverse charge handling by receiving small businesses.)
(DIR) Post #Ax9qJIjo1ZbOuchlyq by mntmn@mastodon.social
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@pmdj @joborg yes, it does suck, also for manufacturers like us who have to keep tables of all the EU state VAT percentages/rules and have to collect them. at least we can transfer the amount to one centralized bank account and don't have to send it to all the individual govts. i do get a bunch of late payment letters from diverse eu govts though ^^
(DIR) Post #Ax9qXMOhDOqMJfXE8m by pndc@social.treehouse.systems
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@mntmn Whether it is an "error" depends on your point of view. The purported reason that it is to encourage buying American only makes sense if it is even possible to buy American or that the American products are not priced out of the market. But it is very much by design.As it is, this is really just an across-the-board 15% tax hike on many goods which is ultimately paid by American consumers and pocketed by the US government (and thanks to corruption, no doubt diverted to Trump et al).
(DIR) Post #Ax9qXN5EfEs4RbRCRk by mntmn@mastodon.social
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@pndc agreed
(DIR) Post #Ax9rkGIZIlKF7UNuL2 by pmdj@mstdn.social
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@mntmn @joborg There should definitely be more relaxed rules and harmonisation in favour of small-to-medium businesses. I wouldn't expect to be paying less tax, but the complexity favours big business.Not just because compliance processes have a significant fixed cost, but because big businesses can afford to just not comply some of the time and still get away with it.
(DIR) Post #AxAAWYFzdMvJtMM8Fk by newts@fosstodon.org
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@mntmn yes. it is not a well thought economic policy but a brutal extortion scheme to get concessions for specific oligarch and corporate interests.
(DIR) Post #AxAQk5vNMw95LCBydM by bnys@lasersword.club
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@mntmn there's no logic or policy or plan behind any of these moves. don't think too hard about it.
(DIR) Post #AxAnX77Bvf8wDMUwS0 by Ced@mastodon.sdf.org
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@mntmn vat is actually very different from tariffs… I won’t do a good job at explainining so will refer you to https://taxpolicy.org.uk/2025/04/02/no-vat-isnt-a-tariff-but-the-us-would-benefit-from-adopting-it/. I learnt a lot from reading it, it actually is a good system…
(DIR) Post #AxHAnOTQcaHoZxOHg0 by ikuturso@mastodon.social
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@mntmn EU companies have to pay VAT so it is only fair that VAT is paid on imports too. Definitely not a reasonable basis for any kind of retribution with tariffs.