Remarks: Sen. Cruz has proposed a VAT System of increasing budget shortfalls uncovered in his "Flat Tax" proposal. Over time, with a "Flat Tax"- a sizeable budget deficit is incurred, ballooning to adrag on both Public and Private Sector...affecting American consumers and cost of government services. As a means of closing this shortfall, he proposed two new Taxes. This would not only increase Public Sector's "foot print" over every aspect of every American's livelyhood, it would also massively expand government's role of an out of control IRS.. Sen. Cruz cannot be elected President...he's a wolf in sheep's clothing seeking to double the size of Government and control every aspect of American life and living.
Consider the manufacture and sale of a widget. "Gross margin" and "profit" mean the same. Profit is what's left after paying other costs( rent and personnel).
I.Without any tax
A manufacturer spends $1.00 on raw materials and makes a widget.
He sells it wholesale to a retailer for $1.20, with a gross margin of $0.20.
Retailer sells the widget to a consumer for $1.50, with a gross margin of $0.30.
II.With a sales tax
With a 10% sales tax:
Manufacturer spends $1.00 on raw materials, certifying it is not a final consumer.
Manufacturer charges retailer $1.20, certifying retailer is not a consumer, with a gross margin of $0.20.
Retailer charges consumer $1.50 + ($1.50 x 10%) = $1.65. Pays government $0.15 with a gross margin of $0.30.
Consumer paid 10% ($0.15) extra, compared to No. I example. Government collected taxes owed. Retailers didn't pay any taxes. Consumers paid the tax! Retailer has cost of paperwork in order to correctly pass on to government collected sales tax. Suppliers and manufacturers have the burden of supplying correct certifications and checking that retailers are not "end" consumers.
Online sales are different. If online retail firms haven't a physical presence in a state (where the merchandise is delivered) retailer is NOT obliged to collect sales taxes from "out-of-state" purchasers. State law requires purchaser to report such "out-of-state" purchases to state taxing authority and pay a use tax. This compensates a sales tax not paid by retailer. Many citizens are unaware of this obligation. States make little effort to:1) raise that awareness or 2)provide an easy way for "purchaser" complying with this obligation.
III.With a value-added tax
With a 10% VAT:
The manufacturer spends ($1 + ($1 × 10%)) = $1.10 for raw materials. Seller of raw materials pays government $0.10.
Manufacturer charges retailer ($1.20 + ($1.20 × 10%)) = $1.32 paying government ($0.12 minus$0.10) = $0.02, leaving the same gross margin of ($1.32 – $1.10 – $0.02) = $0.20.
Retailer charges "end" consumer ($1.50 + ($1.50 × 10%)) = $1.65 paying government ($0.15 minus$0.12) = $0.03, leaving the same gross margin of ($1.65 – $1.32 – $0.03) = $0.30.
Both manufacturer and retailer realize less (percentage) gross margin.
Taxes paid by manufacturer and retailer to the government are 10% of the values added by their respective business practices (e.g. the value added by the manufacturer is $1.20 minus $1.00, thus the tax payable by the manufacturer is ($1.20 – $1.00) × 10% = $0.02).
With VAT, "end" consumer paid to government same dollar amount as with a sales tax. Businesses do not incur any taxes. Their obligation is limited to preparing paperwork! They pass on to government(the IRS) differences between amount collected in VAT (output tax, an 11th of their sales) and what was spent in VAT (input VAT, an 11th of their expenditure on goods and services subject to VAT). System "weak link." Manufacturer and retailer are free from any obligation to request certifications from purchasers who are not end users, and provide any such certifications to their suppliers.
Businesses incur increased bookkeeping costs NOT reimbursed by the IRS. Companies must hire staff and accountants just to handle VAT paperwork. This additional COST would beavoided were they only collecting sales taxes. NOTE: Added overhead costs required to collect VAT, businesses collecting VAT have lower profit margins than do businesses collecting sales tax.
Advantages of a VAT. Under VAT, all sellers collect tax and pay government. A purchaser has an incentive to deduct input VAT, must prove it has the right to do so. See, it's holding an invoice quotingamount of VAT paid on the purchase. Also indicating supplier's VAT registration number. Under asales tax system, seller doesn't care if a purchaser is the final user or not. See, tax payer(purchaser) doesn't bother to collect the tax...that's seller's problem.
More Power to Government and Lawmakers. The more government spends and uses tax and regulatory policies to micromanage economic affairs, the more power it amasses. Private citizens and businesses react to the government’s accrual of power by seeking more access to decision makers. Large benefits businesses gain from receiving VAT exemptions for their product, causes them to seek VAT relief from the government. "Carve-outs" for businesses will give government more power to pick marketplace winners and losers. This makes business success dependent on procuring (lobbying for) government favors instead of meeting public product demand. This concentrates more power in government, increasing power of businesses and industries with strong lobbies at the expense of those with less political sway. This will only increase the alienation that many feel from the government that is increasingly beholden to the powerful (crony-capitalists and US Chamber of Commerce).
Government-Growing Tax
A VAT can collect a staggering amount of revenue. In the present budgetary context, some experts are calling for a VAT large enough to close massive current and future deficits. For example, the Domenici–Rivlin Task Force report calls for a 6.5 percent “deficit reduction sales tax,” which is in reality a VAT. The additional revenue needed to close the existing budget gap would require a VAT between 15 percent and 20 percent (has Sen. Cruz mentioned this fact?), which would be in line with VAT rates in other economically developed countries. In fact, the EU requires its members to levy a VAT of at least 15 percent, and in some countries, the VAT is as high as 25 percent. In Brazil, this has increased to 60%.
At 15 percent, a VAT would collect about 6 percent of gross domestic product (GDP). In 2019, this would mean more than $1.2 trillion in higher taxes. If the rate was 20 percent, the VAT would raise 8 percent of GDP, just under $1.7 trillion in higher taxes in 2019. A tax increase of this magnitude would raise the federal tax burden between 33 percent and 44 percent above its historical average.
Once a VAT is in place, Congress could easily increase the VAT any time it wants more taxpayer money to pay for new programs. Continually increasing the size of government would become considerably less painful because small increases in the VAT rate could raise substantial sums of revenue. An increase of just 1 percent would raise more than $80 billion per year by the end of the decade.
The ability of the VAT to raise money will almost certainly prove irresistible to Members of Congress(Sen. Cruz is their champion). Experiences of other industrialized countries bears this out. As Table 1 shows, 29 of the 30 countries in the Organization for Economic Co-operation and Development have implemented VATs. The United States remains the lone exception. In the years since they began their VATs, 20 of the 29 have increased their rate by at least 1 percentage point. Denmark leads the group with a 10 percentage point increase from 15 percent to 25 percent. On average, the 20 countries have raised their VAT rates by 4.5 percentage points.
Link: http://www.heritage.org/research/reports/2010/12/the-value-added-ta...
Missing trader fraud (also called missing trader intra-community, MTIC, or carousel fraud) is the theft of Value Added Tax (VAT) from government by organised crime gangs, exploiting VAT treatment within multi-jurisdictional trading where shipment of goods between jurisdictions is VAT-free. This allows a person committing fraud to charge VAT on the sale of goods, not paying this over to a government's collection authority, pocketing and taking the VAT with them. A "missing trader" is a trader absconding with the VAT. "Carousel" refers to a more complex type of fraud, where VAT and goods are passed around between companies and jurisdictions, similar to how a carousel goes round and round.
Link: https://en.wikipedia.org/wiki/Missing_trader_fraud
3 Types of VAT Systems
1) Credit Invoice VAT
2) Subtraction Method VAT
3) Addition Method VAT
Advantages: All Three systems TAX only CONSUMPTION. Savings & Investment are omitted.
Disadvantages: All three systems hide from consumers, VAT paid.
A) None are "transparent" (no accounting entries) ! Subject to fraud at ALL stages of Supply chain System.
B) Raises Cost of Goods and Services Sold (This is both Sellers Revenue Loss, and Buyers Increased Price Paid)
(end of article)
Commentary: Sen. Cruz - a wolf in sheep's clothing!
VAT system increases Public Sector's "footprint" over every aspect of a country's economy. Lawmakers prefer VAT Systems because it hides the true rate of taxation from consumers and more important, hides the true cost of government services. VAT rates typically rise after implemented (they are hidden therefore consumer is unaware of tax increases).
Ted Cruz’s “Business Flat Tax:” A Primer
Senator Ted Cruz of Texas has proposed a tax plan that involves a rather unusual tax not currently seen in the United States. I’m pre-emptively writing this post to try to help people understand how this tax would work, because in my experience very few American journalists or even economists know how it would work. It’s actually a little simpler than the fancy nomenclature would suggest, and it can be explained through its similarities with existing U.S. federal taxes. I’ll try to make this a little easier here.
What Is Ted Cruz’s Business Flat Tax?
read more:>>>>Here
And Also might like :
DUAL CITIZENS - CRUZ & RUBIO
Natural Born Citizen
Don't forget to follow the Friends Of Liberty on Facebook and our Page also Pinterest , Twitter. PLEASE help spread the word by sharing our articles on your favorite social networks.
Once a VAT is in place, Congress could easily increase the VAT any time it wants more taxpayer money to pay for new programs. Continually increasing the size of government would become considerably less painful because small increases in the VAT rate could raise substantial sums of revenue. An increase of just 1 percent would raise more than $80 billion per year by the end of the decade.
The ability of the VAT to raise money will almost certainly prove irresistible to Members of Congress(Sen. Cruz is their champion). Experiences of other industrialized countries bears this out. As Table 1 shows, 29 of the 30 countries in the Organization for Economic Co-operation and Development have implemented VATs. The United States remains the lone exception. In the years since they began their VATs, 20 of the 29 have increased their rate by at least 1 percentage point. Denmark leads the group with a 10 percentage point increase from 15 percent to 25 percent. On average, the 20 countries have raised their VAT rates by 4.5 percentage points.
Link: http://www.heritage.org/research/reports/2010/12/the-value-added-ta...
Missing trader fraud (also called missing trader intra-community, MTIC, or carousel fraud) is the theft of Value Added Tax (VAT) from government by organised crime gangs, exploiting VAT treatment within multi-jurisdictional trading where shipment of goods between jurisdictions is VAT-free. This allows a person committing fraud to charge VAT on the sale of goods, not paying this over to a government's collection authority, pocketing and taking the VAT with them. A "missing trader" is a trader absconding with the VAT. "Carousel" refers to a more complex type of fraud, where VAT and goods are passed around between companies and jurisdictions, similar to how a carousel goes round and round.
Link: https://en.wikipedia.org/wiki/Missing_trader_fraud
3 Types of VAT Systems
1) Credit Invoice VAT
2) Subtraction Method VAT
3) Addition Method VAT
Advantages: All Three systems TAX only CONSUMPTION. Savings & Investment are omitted.
Disadvantages: All three systems hide from consumers, VAT paid.
A) None are "transparent" (no accounting entries) ! Subject to fraud at ALL stages of Supply chain System.
B) Raises Cost of Goods and Services Sold (This is both Sellers Revenue Loss, and Buyers Increased Price Paid)
(end of article)
Commentary: Sen. Cruz - a wolf in sheep's clothing!
VAT system increases Public Sector's "footprint" over every aspect of a country's economy. Lawmakers prefer VAT Systems because it hides the true rate of taxation from consumers and more important, hides the true cost of government services. VAT rates typically rise after implemented (they are hidden therefore consumer is unaware of tax increases).
VAT unleashes a complete Public Sector control to MICROMANAGE every aspect of Private Sector business and production. With government expansion into every sector of a nations economy, inefficiencies will logically occur and a countries "New Normal" will result. For proof, please study charts in "heritage.org" link. VAT System of Taxation invites both Public Sector AND Private Sector fraud on a national and international scale. Sen. Ted Cruz should NOT be Our Country's President. Pray. Amen. God Bless America and ALL Americans. Read A Bible. NKJV
I did some googling and this is true. I found another article that explains it:
Ted Cruz’s “Business Flat Tax:” A Primer
Senator Ted Cruz of Texas has proposed a tax plan that involves a rather unusual tax not currently seen in the United States. I’m pre-emptively writing this post to try to help people understand how this tax would work, because in my experience very few American journalists or even economists know how it would work. It’s actually a little simpler than the fancy nomenclature would suggest, and it can be explained through its similarities with existing U.S. federal taxes. I’ll try to make this a little easier here.
What Is Ted Cruz’s Business Flat Tax?
read more:>>>>Here
And Also might like :
DUAL CITIZENS - CRUZ & RUBIO
Natural Born Citizen
Don't forget to follow the Friends Of Liberty on Facebook and our Page also Pinterest , Twitter. PLEASE help spread the word by sharing our articles on your favorite social networks.
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