- Jan 2011
As I wrote this power is more concentrated in anonymous corporation and funds.....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.
Everybody can afford to save..... its a mindset (yeah, I know , its un-american)..... And no , its not right to disincentivize saving and investment... Saving and investment are engines for the creation (among other things) of small businesses.... Your family restaurant, your laundromat, your souvenir shop etc.... typically created by people who saved, invested and worked a lot.... and once they did that they created jobs and generated additional tax revenue for the state.... In some countries small businesses contribute over 40% of the GDP (almost as much as large corporations)
This is for Canada
Based upon estimates, the contribution to GDP by business size did not vary significantly throughout the period 2002−2014 (Figure 13). On average, from 2010−2014, the contribution of small businesses to GDP was 38.4 percent, the contribution of medium-sized businesses was 11.8 percent and the contribution of large businesses was 49.8 percent.
Key Small Business Statistics - January 2019 - SME research and statistics
This is for emerging economies
Formal SMEs contribute up to 60% of total employment and up to 40% of national income (GDP) in emerging economies.
This if for the EU
SMEs are the backbone of the EU´s economy … All but 0.2 % of enterprises which operated in the EU-28 non-financial business sector in 2016 were SMEs. These SMEs employed 93 million people, accounting for 67 % of total employment in the EU-28 non-financial business sector, and generating 57 % of value added in the EU-28 non-financial business sector. Almost all (93 %) of the SMEs were micro SMEs employing less than 10 persons.