[HN Gopher] Freelancers aren't happy with Japan's new invoice sy...
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Freelancers aren't happy with Japan's new invoice system
Author : mikhael
Score : 100 points
Date : 2023-09-26 13:41 UTC (9 hours ago)
(HTM) web link (www.japantimes.co.jp)
(TXT) w3m dump (www.japantimes.co.jp)
| konschubert wrote:
| I don't get it.
|
| We have the same system in Germany.
|
| If you're a small business, you don't pay VAT for the invoices
| you wrote, and your business customers cannot deduct any VAT when
| they buy from you.
|
| If you're a big business, you pay vat and your biz customers
| deduct that vat again from their own vat payments.
|
| It's all good and fair, no?
|
| I guess that before, the VAT-paying customers were subtracting
| 10% of their payments to small companies from their VAT payments,
| as if the small companies had already paid VAT?
|
| That was effectively a Japan-specific subsidy of small businesses
| with a hard cutoff at 10k.
|
| I suppose that's why people are complaining: they would like to
| keep their subsidies.
| miohtama wrote:
| In Finland and AFAIK all Nordics, all invoices must be VAT
| inclusive. If you are selling up until 15k EUR year you can do
| it VAT free, which is too small to be considered a professional
| business. Alternatively if you are selling services outside the
| EU (freelancing internationally).
|
| It sounds like it was indeed subsidy for small businesses. I
| don't know about Japan, but in some countries like Italy there
| is a problem of small inefficient businesses. Whether such
| direct or indirect subsidies are good or not for the economy as
| whole, to keep these small businesses around, is a good
| question which may not have a definite answer. Internationally
| it may reduce competitiveness, but it may be good for local and
| rural area employment, which increases the quality of life for
| a very small national cost.
|
| Also there is cost for maintaining the records and
| adminstration: for 15k EUR/year this cost would be significant
| % for the actual value adding activity.
| Zanfa wrote:
| > In Finland and AFAIK all Nordics, all invoices must be VAT
| inclusive. If you are selling up until 15k EUR year you can
| do it VAT free, which is too small to be considered a
| professional business. Alternatively if you are selling
| services outside the EU (freelancing internationally).
|
| There's also VAT reverse charge for invoices when selling
| goods & services between EU countries where you don't include
| VAT on the invoice.
| JanSt wrote:
| Only B2B
| logifail wrote:
| > In Finland and AFAIK all Nordics, all invoices must be VAT
| inclusive. If you are selling up until 15k EUR year you can
| do it VAT free, which is too small to be considered a
| professional business. Alternatively if you are selling
| services outside the EU (freelancing internationally).
|
| Isn't there provision for reverse charge (effectively zero
| VAT) on B2B transactions where both parties are within the
| EU?
| JanSt wrote:
| It's not zero VAT. It just reverses who has to pay the VAT.
| E.g Microsoft invoices me at 0% VAT but I have to report
| and pay 19% to the state. (b2b only)
| Arcanum-XIII wrote:
| Uh ? No. I don't pay for VAT if I buy anything out of
| Belgium - because it would create a big administrative
| mess of pay back between member state.
|
| Which is the stupidest system internally : get paid vat,
| paid it to the state minus the VAT you're owned as
| business for whatever you've bought. Loss of time and
| energy all around.
| Kiro wrote:
| I would still call it zero VAT.
|
| What happens is that you debit and credit the same VAT
| amount in the books, effectively deducting and zeroing it
| immediately.
|
| https://europa.eu/youreurope/business/taxation/vat/cross-
| bor...
| brtkdotse wrote:
| Between countries, yes. Domestically, you invoice
| businesses with VAT, hold on to the VAT money and quarterly
| deposit it to the tax authorities (minus the VAT for
| deductible expenses).
| faeriechangling wrote:
| Large businesses are inefficient in an insidious way. It's
| incredibly expensive and inefficient to tax them and get
| money out of them once you put money into them. This sole
| problem is why the neoliberal welfare state does not work.
| Simply making the most powerful organisations around more
| powerful does not actually force them to then turn around and
| help the powerless, it actually just makes them more capable
| of not doing that.
|
| Does favouring small businesses actually reduce international
| competitiveness? Sure - in the same sense that not
| subsidising large businesses reduces international
| competitiveness. But what is the good of having an
| internationally competitive business you can't get money back
| out of? What if ItalyCorp decides they are not an Italian
| company, but actually a company based out of the Canary
| Islands in no way bound to Italy? Making a business
| internationally competitive has no point if you can't also
| make it your vassal, which you can only really do in cases
| where the business relies on some state resource, and even
| then a large business is likely to corrupt the government
| anyways.
|
| Small-Medium sized businessmen by contrast are much much
| easier to tax once they're past the subsidies. Besides that,
| they tend to spend relatively large amounts of their in-
| country in ways that can be taxed efficiently, and on other
| businesses which can also be taxed efficiently. It makes
| addressing income inequality more efficient.
| IG_Semmelweiss wrote:
| Pardon the ignorance, but why is it a subsidy ? Wouldn't it be
| the opposite?
|
| Large business remits to the government the money that they
| subtracted forVAT, for all sales, including tiny opcos. They
| then get the subtraction for VAT.
|
| Small player gets no subtraction.
|
| Am i wrong ?
| konschubert wrote:
| The subsidy is that the small business didn't have to pay vat
| while still being able to attach a you-get-a-refund-from-the-
| government voucher to its invoices.
| Detrytus wrote:
| That is weird. The way it is supposed to work (in my
| country at least) is:
|
| If a company is registered for VAT they will charge you X
| net price + Y amount of VAT for their items. If a buyer is
| also a VAT-registered company they subtract Y from the
| amount of VAT they owe (so it is a tax credit).
|
| If you buy from a small company, not registered for VAT,
| you only pay X, because the seller is not subject to VAT,
| so they do not have to add it. So, you only pay X, and the
| fact that you can't subtract Y from the amount of VAT you
| owe is irrelevant.
|
| So, the small companies have a competitive advantage of not
| having to add 20+% of VAT to their prices.
| chongli wrote:
| You wrote:
|
| _If you're a small business, you don't pay VAT for the
| invoices you wrote, and your business customers cannot
| deduct any VAT when they buy from you._
|
| How can you attach a "you-get-a-refund-from-the-government"
| voucher to your invoices if your customers cannot deduct
| VAT when they buy from you?
| sangnoir wrote:
| > How can you attach a "you-get-a-refund-from-the-
| government" voucher to your invoices if your customers
| cannot deduct VAT when they buy from you?
|
| (Not parent) In Germany, you can't. In Japan, you _could_
| , but that's what's changing.
| konschubert wrote:
| You they could, previously, in Japan.
| docdeek wrote:
| Very similar to the French system: if you are a sole operator
| under a certain revenue threshold you do not charge and cannot
| get rebates on TVA; if you are a sole operator with a standard
| company structure, you charge and get rebates for TVA.
| konschubert wrote:
| Yes, that's in fact another twist that wasn't discussed
| above: the small business does not get rebates for TVA it
| pays itself.
|
| That's a disadvantage, if you're then selling to a business
| customer, because then, the TVA DOES get paid twice.
|
| But most small businesses are services businesses who do not
| have much purchases. And those who do can - at least in
| Germany- get a VAT ID and then write invoices with VAT.
| makeitdouble wrote:
| > If you're a small business, you don't pay VAT
|
| Under the new Japanese system, if you're a small business but
| register to the tax office to get a number, you become taxable.
|
| If instead you do nothing and don't register, you keep being
| exempt of taxation, except big clients will ask you for a
| registration number to get their rebates on their side, so you
| might lose them to other businesses that registered.
| peoplefromibiza wrote:
| it's the same in Italy: you either don't pay VAT but clients
| cannot claim a rebate or you pay it so your clients can ask
| for a rebate.
|
| Depending on the kind of clients you have (end users or
| commercial entities), one is preferable to the the other.
| konschubert wrote:
| Yes, you can also choose in Germany.
|
| Of course, it you don't pay VAT, your big clients cannot get
| a rebate, because no VAT was paid!
|
| It seems like in Japan, small businesses could avoid paying
| VAT, and their clients would STILL get a VAT rebate!
|
| I can see why the Japanese Gov is trying to change that.
| notpushkin wrote:
| Yeah, it's pretty much the same everywhere I did the
| research (Estonia, Russia, Belarus).
|
| What you could do is offer a discount to the business the
| minute they ask for a VAT receipt. (Of course, you bake the
| VAT amount in right from the start.)
|
| Alternatively, you could explain that you aren't paying VAT
| because you want to keep prices low - I've seen a couple
| design studios use this argument successfully many times.
| makeitdouble wrote:
| I'm not versed in corporate taxes, but you're probably
| referring to a flat rate rebate on the client's taxes in
| case they don't bother declaring and proving all their
| expenses.
|
| The new system opens more doors for deduction, but they can
| still continue the way they did before. And flat rate
| deductions have always been accepted to cover cases where
| there was few or no expense in the first place, it's not an
| unintended effect nor a surprise, and it makes everyone's
| life easier overall.
|
| Edit: BTW in the new system there's still additional flat
| rate mechanisms at different levels. They really love it at
| the tax office.
| garba_dlm wrote:
| > It's all good and fair, no?
|
| as good and fair as any bigger and more powerful forces coming
| at you and demanding a cut of whatever it is you do... lest
| you're breaking the law
|
| but this is very normalized, but ultimately is a legacy of
| imperialism and other kinds of centralizing powers: give your
| rulers some freebies or get harassed until you do
|
| an alternative perspective is that we all need to contribute
| some money (and/or energy) to the public systems which do
| things for "all of us" as the public at large
|
| when this is 'mandatory', like it is now (you can always not do
| it, but there will be consequences), we call it taxes and fees,
| to do this voluntarily is the now obsolete tithe (even the
| quantity matches 10%).
|
| the real problem I have with this setup is that money (but I
| actually mean currency) is made up and controlled by
| governments in collab with banking corporations; which means
| they have ways to use this system to move some of said "energy"
| from us to them; this leads me to conclude that then, regular
| taxes like VAT are double dipping on our energy as we 1: get
| taxed so to give money to the government/public entities and
| institutions; and 2: they make up currency and extract
| money/energy from all of us automatically (them theories about
| how money is debt, combined with QE and the new quantitative
| tightening, are all parts of how this whole hidden system
| works);
|
| arguably this way to take advantage of the currency/monetary
| system is only being used by private financiers (big banking)
| not governments which really do need the taxes to function at
| least for now but I already ranted too much
| michaelmrose wrote:
| I presume you like roads, social security, a standing army,
| and a million other things. These things cost money and the
| logical way to raise that money is via taxes. Please don't
| post unreadable incomprehensible stream of consciousness
| here. Take a moment to refine the words running through your
| head into a coherent paragraph or two.
| jimkleiber wrote:
| Personally I wish more people would post stream of
| consciousness writing, as I believe it often reveals the
| uncertainty and inner conflict that exists within our
| thoughts and feelings.
|
| What I gathered from what they posted was a conflict about
| realizing that governments need money but wishing they
| didn't force people to pay, but not sure if people would
| pay if it weren't forced, and trying to dance between those
| ideas.
|
| Some may not like stream of consciousness and some may,
| it's hard to know, and it may depend on our current
| situation and format of the post or culture of the place.
|
| Maybe HN has a culture to distill thoughts before posting,
| I dunno. I like more raw thoughts typically.
| michaelmrose wrote:
| Nobody on earth who has spent any amount of time thinking
| about it thinks society at scale would pay for common
| goods if it was optional. Part of actually distilling
| your thoughts into a useful form is realizing when to use
| the backspace key.
|
| There might be 1000 people reading this. We all have a
| stream of conscioisness. If we all shared it this thread
| would be unteadable with a few gems buried in dross.
|
| Distilling your thoughts down and sharing what is worthy
| is a universal good not merely a cultural value. It's why
| we are reading this and not YouTube or Facebook comment
| threads.
| zlg_codes wrote:
| To be frank, this place is a slightly nerdier Reddit with
| stronger topicality enforced, whose audience trends
| toward middle age, male, and moderate. It is not a
| shining city on a hill. I can find a lot of the same
| content on Lobste.rs later in the day, and get comments
| from an _actually_ exclusive group.
|
| We're here because there is enough news to keep us
| visiting, and relaxed enough rules to feel comfortable
| challenging each other intellectually.
|
| Most of the Internet used to be this way, before social
| media.
| zlg_codes wrote:
| Go look at America's budget and come back with that
| ignorance... The amount of money America spends on itself,
| its people, and its infrastructure, is embarrassing.
|
| Taxes are often lauded as a necessary evil, but it's
| generally not JUST the tax people have trouble with. It's
| how it's allocated. And we can cutely sidestep or handwave
| that as "a voting problem", but it's interconnected.
|
| I'd have no problem paying taxes to an entity who I could
| trust and know has my back, who invests in the
| infrastructure that makes life in this country better.
|
| But we cannot trust that entity, it never does what it says
| it should on paper. It sends money overseas for pet
| military projects. It doles out countless frivolous
| contracts to fulfill the gargantuan military budget.
|
| Collective pooling of resources only works when the
| spending of those resources is done for the benefit of
| everyone contributing. That currently does not happen.
|
| I like creature comforts like anyone else, but I'd rather
| live in a country that gives a shit about me and puts my
| tax dollars to good use, instead of feeling like livestock
| in a rat wheel whose contributions to the country will
| never bear into a tangible benefit.
| kazinator wrote:
| It sounds very similar to the GST (goods and services tax) wee
| have in Canada, which was introduced by Brian Mulroney in the
| 1980s.
|
| Small operators are exempt from collecting GST. What that means
| is that if a small operator is your supplier, then when you
| purchase something from them, you don't have a GST receipt. Thus,
| you cannot claim the "input credit" on that purchase to recover
| any GST.
|
| I'm not entirely understanding the situation in Japan from the
| article's description, but it sounds an awful lot as if the
| people exploiting the small-time suppliers (freelancers making
| less than 10M Yuan ) must have been fraudulently claiming that
| they paid the tax to those small-time suppliers, and using that
| to claim offset credits to reduce how much of that same tax which
| they collected from their customers they remit to the government.
|
| The freelancers will look 10% more expensive, because the
| corporations which exploit them can't use a loophole to hold on
| to tax dollars.
|
| "Please sign my petition so that my employers, who won't give me
| a full time job but keep me around as a disposable contract
| worker, can keep stealing tax money, so that I look cheaper to
| them, and consequently have a job so I can continue to barely
| make ends meet."
| rjmalagon wrote:
| Minor inconvenience vs Mexico electronic invoice hell. Our VAT is
| 16%, for everyone except a select group of small business, of a
| now discontinued tax regimen. We must issue a dual cryptographic
| signed XML invoice (by the emitter and the tax authority) with
| individualized items with ID codes from a tax authority catalog
| of recognized products and services, that includes tampons
| (53131615) to warships (25111708) to radical ecological
| organizations (94131701). Every invoice needs to be sent to the
| tax authority servers to get the second signature, without it the
| invoice is not valid. Without it is not possible to deduct to VAT
| payments, or (monthly) tax filling in general. No internet, no
| invoice software, no computers, equals no invoice and no invoice
| is almost tax fraud. A fiscal invoice is only emitted when a
| customer asks for it, but businesses are obliged to emit a
| "general public invoice" with all the sales where customers don't
| ask for a fiscal invoice.
| isilofi wrote:
| Try to vacation in Italy: Consumers are obliged to get an
| invoice, businesses are obliged to provide one. Including
| cryptographic signatures (but without the big-list-of-article-
| numbers and centralized signatures craziness). The financial
| police are allowed to stop customers within a certain distance
| of a business and ask for the invoice for their purchase. If
| the customer cannot provide one, the customer and the business
| are fined heavily. That's why the business owner will get very
| angry with you when you (as a clueless tourist) immediately
| chuck the invoice in the bin, because why would you keep the
| invoice for a pack of gum...
| twic wrote:
| > warships (25111708)
|
| That's 3366113 in the US and Canada:
|
| https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=...
| yayr wrote:
| I assume that a rate of 10% VAT is rather low in comparison
| internationally (e.g. EU is around 20 %).
|
| Also for typical business customers it should be identical to
| purchase something for a net amount of x or for a net amount of x
| plus taxes. They can deduct the taxes anyway and the net amount
| is identical. That is why usually you can display prices to
| business customers without VAT.
|
| So as I understand it, it is a change, but not with any real
| business effects unless one of the parties had incorrect taxes
| before... Which would mean that this party before was subsidised
| by other taxpayers.
|
| https://taxfoundation.org/data/all/eu/value-added-tax-2023-v....
| notpushkin wrote:
| https://archive.md/UV1WR
| chrisandchris wrote:
| > Small businesses that were previously tax-exempt may need to
| register or risk losing clients -- but if they do register, they
| will have to pay an additional 10% in taxes.
|
| I can understand, and in Switzerland you are tax-excempt if you
| are (each year) under 100k revenue. However, you won't be able to
| get the tax others have on their bill back then (input tax).
|
| Besides that, taxes for revenue exist because a country (shall)
| provide value to you (like safety or administrative stuff, like
| debt collection). And this stuff must be paid too.
| traspler wrote:
| I thought one of the reasons many smaller creators were afraid of
| it was the publication of their personal information when they
| register and that leading to potential harassment or if what you
| are creating is socially spicy it could lead to unwanted
| attention.
| aidog wrote:
| My animator friend is very upset about this because she will lose
| 10% of her income. I'm not sure if the anger is directed into the
| right direction, but I agree that it is not really a good change.
| I'm not looking forward to the effort and to publish my adress
| either. Inflation this year is absolutely brutal with some
| groceries almost twice as expensive.
|
| As a freelancer I can invoice a client with consumption tax on
| the invoice, but not pay the consumption tax, yet the client can
| get the consumption tax he paid to me back. I wouldn't be
| suprised if criminals managed to get money from the government
| through fake invoices.
| ComputerGuru wrote:
| > As a freelancer I can invoice a client with consumption tax
| on the invoice, but not pay the consumption tax, yet the client
| can get the consumption tax he paid to me back.
|
| And this is legal (not just in the sense that it's technically
| allowed but also that you're not technically required to file
| something at the end of the year and pay the difference [0])?
| Because you're saying the government pays 10% of the purchase
| price in this scenario (crediting large businesses for 10% of
| the paid price, and that amount goes straight to you).
|
| > I wouldn't be suprised if criminals managed to get money from
| the government through fake invoices.
|
| If it really works that way, then there's absolutely zero
| chance this wasn't being milked for every Y=1!
|
| [0] eg in the USA, residents of states that charge sales tax
| are legally not charged sales tax on purchases made in another
| state (with exceptions) but they're technically required to
| track those purchases and pay the sales tax themselves at the
| end of the year. Enforcement is approximately zero, though.
| jt2190 wrote:
| > they're technically required to track those purchases and
| pay the sales tax themselves at the end of the year.
| Enforcement is approximately zero, though.
|
| That's called "use tax":
| https://en.m.wikipedia.org/wiki/Use_tax
| Roark66 wrote:
| In Poland VAT fraud used to be absolutely huge a bit under a
| decade ago. After the government established really strict
| tracking of invoices and they started going after the VAT gangs
| the budget revenues literally doubled in the span of few years.
| I have mixed feelings about VAT here. We have one of the
| highest rates in Europe on most goods(23%), but running a VAT
| registered company I do get the VAT on purchases back. However,
| in the UK, where I used to have my VAT business before I could
| keep 60% of the VAT my customers paid me with no expenses! This
| scheme had different percentages for different kinds of
| businesses. In my case it was 13% of the net value could be
| kept if I remember correctly. It sure was sweet to bill a
| customer PS10k, get PS12k paid and only send PS700 of VAT to
| the tax man without having any expenses! (the income tax is
| another story and it is actually way better in Poland than in
| UK, but that is beside the point).
|
| So despite having run VAT registered businesses for over a
| decade in two EU countries I'm confused what is it that
| Japanese government is doing now and why. If anyone can explain
| it comparing it to VAT/sales tax in other countries that would
| be great
| myspy wrote:
| This sounds like abuse of animators by studios to save a lot of
| money. They should give them a contract or pay them more
| instead of people being angry they don't get that much in the
| beginning.
| RedShift1 wrote:
| Only 10%? Cries in 21% VAT.
| realPubkey wrote:
| 10% increase, not 10% in total.
| croes wrote:
| >The government had introduced a reduced consumption tax rate
| of 8% for certain products like food and newspapers, besides
| the standard 10%
| naillo wrote:
| 10% increase, not just 10%
| Ekaros wrote:
| Technically 9%... As it is 10% tax, so it is not from 1, but
| 0.9091
| croes wrote:
| >The government had introduced a reduced consumption tax rate
| of 8% for certain products like food and newspapers, besides
| the standard 10%
| gunapologist99 wrote:
| The people voted for these taxes (or they voted for the people
| who voted for them).
|
| Interestingly, however, increased govt revenue is not
| correlated with long-term increased economic output or GNP. (Of
| course, govt revenue will increase temporarily whenever taxes
| increase.) Most of the highest tax nations have mediocre
| national output.
| e61133e3 wrote:
| 27% in Hungary
| f1shy wrote:
| Whaaaat? Are other taxes lower or non existing?! That is
| crazy!
| croes wrote:
| But the average wage in Japan is only $39,319
| askonomm wrote:
| Average wage in Estonia is way less than that (and I would
| imagine most of EU's average wage is less than that), at
| 21,420.78 USD, but we have 20% VAT.
| croes wrote:
| What are your costs of living?
| morjom wrote:
| https://www.numbeo.com/cost-of-living/in/Tallinn
| miohtama wrote:
| And small businesses have median wages below average.
| croes wrote:
| I suspect that the small companies in Japan and Europe are
| below average by the same factor.
|
| In the end it depends on the cost of living and the rents.
| closewith wrote:
| 23% in Ireland.
| hirako2000 wrote:
| Norway, Sweden and Denmark takes 25%. Hungary shamelessly
| demands 27%
| CafeRacer wrote:
| Latvia is more like 33%... not even thinking about France.
| seszett wrote:
| France increased VAT from 19.6% to 20% in 2014, I think
| it is supposed to increase again to 22% in 2024.
| ComputerGuru wrote:
| Latvia _seems to be_ up to 21%?
|
| https://www.avalara.com/vatlive/en/country-
| guides/europe/lat...
| jacquesm wrote:
| VAT, not income tax.
| [deleted]
| martin-adams wrote:
| This sounds just like the VAT rules in the UK. What I don't
| understand is why a company buying the services of a freelancer
| who isn't consumption tax registered would be an issue in Japan.
|
| In the UK it's very common to buy services from non-VAT
| registered businesses. You don't claim the VAT back because no
| VAT was added to the invoice.
| konschubert wrote:
| It seems that in Japan, customers of small businesses could
| claim the VAT back even though the small business did not pay
| VAT.
|
| It was a subsidy that is being removed.
| ilikeitdark wrote:
| Come to Spain...which must have one of the worse freelance
| systems in the free world.
| anigbrowl wrote:
| What is the rationale* for VAT? I have never, ever understood
| this. If you are an individual, you pay income tax on your
| earnings. Why should you be taxed on your spending as well?
|
| * 'We want to use the money for worthy purposes' isn't a
| rationale. A rationale is a reason people should pay.
| lmm wrote:
| > What is the rationale* for VAT? I have never, ever understood
| this. If you are an individual, you pay income tax on your
| earnings. Why should you be taxed on your spending as well?
|
| > 'We want to use the money for worthy purposes' isn't a
| rationale. A rationale is a reason people should pay.
|
| I could equally say "You pay VAT on your spending. Why should
| you be taxed on your earnings as well?". Ultimately governments
| need taxes and take them where they can find them.
|
| The benefit of VAT is that it's a tax that's harder to evade,
| because the rebate system means everyone is reporting on
| everyone else. A high VAT rate is also a way to do stealth
| protectionism without falling foul of the WTO rules - domestic
| producers can pay de facto higher salaries (because the VAT
| revenue allows you to reduce income tax) whereas the full VAT
| rate gets paid on foreign-produced goods.
| patmcc wrote:
| What's the rationale for income tax? It makes no more sense to
| tax income than spending. I agree it's unpleasant to be "double
| taxed" but until the policy makers start listening to the
| economists it'll continue.
| causi wrote:
| It all seems rather geared towards funneling money upward
| instead of downward. Individuals pay taxes on gross income,
| while businesses only pay taxes on net profit. A poor person
| makes a big purchase in the form of a new computer or
| television and pays sales tax, while a rich person makes a big
| purchase in the form of stock, pays no taxes, and then when he
| sells it he only pays taxes if he sells it at a gain and if he
| sells it at a loss he gets to _subtract the loss_ from his
| income for the year.
|
| Fucking imagine if you bought a car and when you resold it you
| could subtract the depreciation from your income taxes. No
| wonder the French decided public decapitation was the only
| solution.
| gruez wrote:
| >A poor person makes a big purchase in the form of a new
| computer or television and pays sales tax
|
| Because if you're buying it for personal use it's presumably
| for consumption, and if you're buying it for business use
| it's for business use. In the latter case you don't want to
| tax it because that would hurt businesses with low margins
| and give vertically integrated businesses an edge. There's
| definitely abuse of this with small businesses, where someone
| buys a pickup truck for "business use" but uses it for
| personal use, but that should be fixed with better
| enforcement of the tax code, not changing the tax regime
| entirely.
|
| >while a rich person makes a big purchase in the form of
| stock
|
| Because VAT/sales tax are consumption taxes, not a
| transaction tax. Stocks aren't consumed, so they aren't
| taxed.
|
| >Fucking imagine if you bought a car and when you resold it
| you could subtract the depreciation from your income taxes.
|
| So what are you advocating for? Abolition of all consumption
| taxes?
| causi wrote:
| For the application of sales tax to all purchases including
| stock and the abolition of capital gains tax.
|
| _give vertically integrated businesses an edge_
|
| Why is that bad? Vertical integration allows the more
| efficient use of resources.
| gruez wrote:
| > For the application of sales tax to all purchases
| including stock
|
| So you want to make financial transactions more expensive
| and make the market less liquid? What good can come of
| this?
|
| >and the abolition of capital gains tax.
|
| What justification is there to tax someone buying $500
| stocks and later selling it for $1000 the same as someone
| buying $1000 worth of stocks and selling it for $500?
| Taxing buying $500 worth of TVs makes sense, because it's
| presumably consumed, but it doesn't make sense for
| financial instruments.
|
| >Why is that bad? Vertical integration allows the more
| efficient use of resources.
|
| Companies already reap the savings from vertical
| integration. I'm not sure why the government should give
| them additional incentive to vertically integrate.
| Suppose the tax rate is 10% and we have two supply
| chains, one that's vertically integrated and the other
| that's not vertically integrated. Suppose further that
| both are equally efficient (which is plausible, given
| that nimble firms can outcomplete big conglomerates). Why
| should the government penalize the non-vertically
| integrated supply chain to the order of 10%?
| anigbrowl wrote:
| _So you want to make financial transactions more
| expensive and make the market less liquid? What good can
| come of this?_
|
| Fewer stock market bubbles, less asset inflation.
| gruez wrote:
| Market bubbles aren't caused by stocks trading back and
| forth. They're caused by irrational exuberance and
| macroeconomic factors.
| anigbrowl wrote:
| People are less likely to be irrationally exuberant if
| there's an up-front cost to trading, no? Having to write
| a check (to to speak) to the government feels like real
| money, as opposed to the fantasy of sure-thing future
| profits that naive margin traders and property flippers
| may kid themselves into.
| anigbrowl wrote:
| _Because if you 're buying it for personal use it's
| presumably for consumption_
|
| So what? I already paid taxes on my income, now I need to
| pay additional taxes on what I consume...why? Kindly note
| here that I'm not arguing against the concept of paying
| taxes, but against the fact of being taxed on both income
| and outgoings.
| gruez wrote:
| >So what? I already paid taxes on my income, now I need
| to pay additional taxes on what I consume...why?
|
| It's covered in the wikipedia article:
| https://en.wikipedia.org/wiki/Consumption_tax
| anigbrowl wrote:
| No, it really isn't. The closest is the bit about
| Alexander Hamilton favoring consumption taxes because
| they're politically harder to raise than income taxes.
|
| None of this articulates why I should pay tax on _both_
| earning and spending money.
| lmm wrote:
| > Because if you're buying it for personal use it's
| presumably for consumption, and if you're buying it for
| business use it's for business use.
|
| Most of the biggest expenses in people's lives - housing in
| cities, cars for commuting, food - are for the sake of
| maintaining their job, or just staying alive. In a fair
| world they'd be able to deduct those expenses just as much
| as businesses can. (This doesn't just apply to VAT).
| yohannparis wrote:
| VAT is not a tax on spending, but on the added value your
| business is producing. Which is not related on income, etc.
|
| for more info: https://en.wikipedia.org/wiki/Value-added_tax
| anigbrowl wrote:
| Of course it's a tax on spending, because consumers have to
| pay it when they buy things.
|
| Just defining it as 'a tax on added value' is meaningless.
| Why should we wish to tax _value_ , which is something we all
| seek? To be sure, businesses often just mark up the price of
| things, and we can in turn tax the profits of the business
| same as individuals are taxed upon their income.
| Roark66 wrote:
| Yes, it is a tax on spending done by normal people, but for
| VAT registered businesses it really is a value added tax.
| For example, let's say you buy a widget for $1000 + 20%vat
| = $1200, you record you spent $1000k of your money and you
| "earned" a $200 vat credit(you actually paid $1200, but the
| government "kinda owes you $200"). Then by the magic of
| your sales technique you sell the same widget for
| $2000(+20% vat). You get paid $2400. $400 of this is VAT,
| you take back your $200 and you pay the remaining $200 to
| the tax man at the end of the month/quarter. Therefore you
| really paid 20% on the value added ($1000). Your client, if
| not VAT registered paid 20% on the entire value.
| anigbrowl wrote:
| I'm aware of this (although thanks for taking the time to
| make a succinct explanation).
|
| Thing is, I am not operating a business; as a consumer I
| just see that I am being charged a significant premium on
| the money I spend (and a smaller but non-trivial one on
| the cost of VAT administration up and down the chain).
| It's not clear to me why 'value added' needs to be taxed
| in the first place, as opposed to business profits or
| dividends.
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