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It has been proposed that sales tax be a single measure applied at the point of transfer or exchange, i.e. GST, VAT..
The advantage of this taxation measure is that it requires no yearly consolidation on the part of the individual. And it is also relatively simple to track and enforce.
This taxation
measure (and for that matter all taxation measures) have one major disadvantage...
--- it requires a high level of maintanence on the part of companies and government
It is proposed that a single taxation measure be applied at the point of transfer independent of the exchange of goods. i.e. when money is transfered it is automatically taxed.
The advantage of this taxation method is that it can be completely automated so that there is no requirement for enforcement.
It is also proposed that usual social implications of a flat tax regime will be handled outside of the taxation system. i.e. through the usual socail institutions...
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Totally unclear how this is different from regular VAT or sales tax, except that it maybe applies to a vastly increased range of transactions. And then how does that make it simpler to collect? |
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Well the taxation is collected at the bank... and transfered to the goverment coffers electronically. |
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For example if I transfer 100 dollars to someone elses account they will recieve 100 less tax... |
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So... if I transfer £3000 from a savings account into my current account to pay off my overdraft, I give some of that to the government? |
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I said someone elses account... |
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Although if you took the money out in cash to deposit elsewhere then you would incure tax... |
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"For example if I transfer 100 dollars to someone elses account they will recieve 100 less tax..."
How would the bank know what the money was for (and what tax rate to charge)? Are the banks re-imbursed for providing this service? By whom? What about cash transactions? |
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I often transfer funds as cash - sometimes three days clearing is too long to wait. Also, this would require a massive redesign of the banking system (not really such a huge objection around here) as there is no central register of who owns which accounts. When I move money from a Barclays account to a Lloyds account, both banks treat the transaction as occuring between two strangers who happen to share the same name. |
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This serves exactly the same function as income tax, it just happens at the other end. The good thing about income tax is that for most employees, there is only 1 transaction per week/month to apply tax to. |
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If I lend you $100 and you repay it, the government takes a slice from both transactions. Huge fishy! |
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My sister just booked a holiday cottage for the family. I wired her my share, untaxed. Why should the government get a share of that? She didn't sell me anything. |
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Your objections are all about identifying an exchange of goods --- which I find funny since this is exactly what has been removed from this (new) type of taxation. |
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The idea is to tax movement of money not movement of goods... And it is not acceptable to say that I have two different bank accounts at different banks --- a transfer of funds between these accounts is taxable. |
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It might be an idea to look at the advantages of this taxation measure --- which is to remove those activities that represent a drain on GDP. |
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--- no tax returns
--- no tax accounting
--- no tax law |
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Tax on transfer of funds --> less likelihood of transfer of funds --> undermining the one thing that makes an economy work. |
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And accountants would still be there, sorting out the most efficient way to pay for goods while transferring minimal funds. It would evolve into a fine art involving long chains of suppliers and customers at all levels. |
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On the upside, it would encourage barter. |
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Duh, people would just use cash. |
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Yip everyone would use cash, and since the supply of cash is not equal to the supply of money people trying to avoid tax will trigger... |
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--- an increase in the value money
--- an increase in the velocity of money |
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The funny thing is that the government is in control of the supply of cash so it begs believe as to how people would just use cash instead... |
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Since the amount, value and velocity of cash will never meet the requirements of any modern economy it is failry clear that (peoples insistance on using cash) will have a negative affect on economic output, so... |
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--- the government could increase the money supply
--- or it could wait until companies make the trade off between paying tax and increased trading... |
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It is a bit like going to vagas --- you know the house always wins but they do provide nice hotels and free drinks... |
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