Saturday, October 1, 2011

The Tax Man: Part II

I've heard comments around the blog that the U.S. enjoys a low tax burden compared with other countries.  This, of course, is a reason that is given to support the idea that we can be taxed more.

Found this chart at the Tax Foundation.  Very interesting.  You see, the people who say we're not taxed as much are looking at the overall taxation percentage.  But if you look closely, you'll see that all other taxes are about the same, except the Value Added Tax (or VAT).  That's a consumption tax.

So, in essence, we're taxed at the same level at most other countries...but taxed less on consumption.  Consumption taxes are tricky.  If you consume less, you pay less taxes.  If you consume more, you pay more taxes.  You can (theoretically) adjust your own tax rate with the VAT method.

Problem is, the VAT theory only holds if all other taxes remain the same.  You see, if we all decided to buy less, the federal government would take in less revenue.  Their response?  Raise your other taxes.  This is where the VAT theory falls apart.  I don't think most politicians who talk VAT are actually trying to give you more control of your pocket book...I think they just want more of it.

Interesting stuff to think about.

If this stuff bores you, that makes politicians happy.  The less you pay attention, the more they get of your wallet.

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