Jobs guarantee with income support in response to technological unemployment?

Aug 2014
4,561
Australia
It works that way, only that the example is reductive: You don't pay VAT on a used car. I don't pay a VAT on my used car either: I've just bought myself a 1963 Ferrari 250 GTO, costed me just some dozens of millions...
The VAT was paid on the car when it was new*. That VAT forms part of the total price, which is depreciated as it ages. So you DO pay VAT on used goods, but only a depreciated portion of the original tax, and it goes to the vendor rather than the government. The only way to avoid it is if the tax somehow gets refunded before the rest of its cost is depreciated.

* your particular example is an exception because it was first sold in 1963, which was before the introduction of VAT.
 
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tomar

Ad Honoris
Jan 2011
13,475
The VAT was paid on the car when it was new*. That VAT forms part of the total price, which is depreciated as it ages. So you DO pay VAT on used goods, but only a depreciated portion of the original tax, and it goes to the vendor rather than the government. The only way to avoid it is if the tax somehow gets refunded before the rest of its cost is depreciated.

* your particular example is an exception because it was first sold in 1963, which was before the introduction of VAT.
Its more complicated than that

First, as you noted, that car can be resold a zillion times and as long as its individuals doing the buying and the selling not VAT comes into play (i.e not a cent goes to government coffers)

Second depreciation of the car price (without VAT) and the VAT part occur at different rates (the VAT depreciates quicker)... after a few years, there is very little VAT left (a big part of the VAT depreciation occurs the first year) in the overall price....
 

tomar

Ad Honoris
Jan 2011
13,475
If I ever see a VAT that works that way, I'll look on it more favorably, but here in the US we've never had a VAT.

I still have a problem with accumulated wealth. Not all wealth is invested. Not all investments are equally useful. One problem with the US stock market in recent years is that there is too much money in the market and not enough good investments to absorb it all so we get these repeating cycles of boom and bust caused by too much money chasing too few good investments. Even if it's invested, accumulated wealth represents a concentration of power in too few hands. I'm not calling for some mythical workers paradise where everyone is equally poor, but things have gotten to an unhealthy extreme in recent years.
What you say is true, but I dont think VAT is the problem here (as you point out no VAT in the US).... And a lot of this stock market money comes from large institutions (such as pension funds)..... Many individual investors go after real projects (launching a new company, building something, funding a new product etc....)... You'll find that most of the problems are created by so called institutional investors, as they tend to invest more stupidly and move large amounts of money around (larger than are available to any single "rich" person) at the first whiff of trouble or depending on trends... These large movements tend to create disbalance (large investments drive prices/shares up disproportionately, large divestments likewise drive prices/shares down disproportionately)... Some of these issues could be minimized with a financial transaction tax

Actually I am surprised of those "funds" has not yet bought itself a country to play around with......
 
Oct 2013
14,412
Europix
go back and read what I wrote. We all pay VAT on used cars.
I'm not going back to your post as I did read what You said.

I was responding tomar, more precisely to:

because the "rich" tend to buy different products they generate much more tax revenue (obviously VAT on a Ferrari is not the same as VAT on a VW..... and on second hand cars there is no VAT)...
If we compare a low end car and a high end car, we compare two new, or two used. Not the high end new with the low end used.
 

tomar

Ad Honoris
Jan 2011
13,475
I


If we compare a low end car and a high end car, we compare two new, or two used. Not the high end new with the low end used.
Its not a comparison between cars, but between buying patterns....

The "rich" will tend to buy high end new cars while the "poor" will tend to buy low end used (or not buy at all).... of course there will be some exceptions .....(and I dont really like those terms "rich", "poor" as they are very vague)

 
Oct 2013
14,412
Europix
...(and I dont really like those terms "rich", "poor" as they are very vague)
I don't like it either (well, at least one point of agreement ...)

Its not a comparison between cars, but between buying patterns....

The "rich" will tend to buy high end new cars while the "poor"
Nevertheless, the impact of the TVA is totally different depending on the level of the income.

From a certain level, one earns more than is needed for the bare necessities. And that part is making the difference, as a lot of those aren't VAT-ed.

I wanna decorate my house: I'll buy a nice poster/copy of a master/whatever/ from the mall. I'll pay TVA in it (used Vaxhall talking now).

Or:

I'll buy an original by some Flemish Master or by an art student. I'm not paying any TVA on that. (new VW talking now).

Really, it isn't just some exception: a reasonable high level of revenues permit having activities, hobbies that often are TVA extempted. Going to the Theatre, to Opera, buying not a reproduction but an original. Aso.
 

Chlodio

Forum Staff
Aug 2016
4,055
Dispargum
What you say is true, but I dont think VAT is the problem here (as you point out no VAT in the US)
Yes, a VAT is not the problem here in the US, but it's not the solution either, if we understand the problem as:
1. Wealth = power
2. Left unregulated, wealth (and power) tend to concentrate in very few hands
3. The tax code can be used to break up, or at least slow down, the concentration of wealth (and power)

The VAT, by taxing only spending and consumption, incentivizes saving and investment. It therefore encourages the accumulation and concentration of wealth by those who can afford to save and invest. We don't need to encourage the accumulation and concentration of wealth. We need a tax that will distribute wealth more widely. The income and inheritance taxes used to do this before our national tax philosophy changed to the advantage of the wealthy.
 

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