The unclear part says: and obstacles to home ownership. The alternative revenue
ID: 2586868 • Letter: T
Question
The unclear part says:
and obstacles to home ownership.
The alternative revenue source most often proposed is the value-added tax (VAT). The United States is the only major industrialized nation that does not have some type of VAT. Its revenue generating power is enormous. The Congressional Budget Office has estimated that a VAT of 5% would bring in more than $100 billion annually.
Reflections TTE the TDE e Mirror Which Is Fairest of Then All? Taxes åre not pretty. In fact, though altways un popular taxes in recent years have become downight ugly in the eyes of taxpayers. Yet the govertment services and benefits they pay for are innrsing demand. The VAT is related to the concept of value added discussed in relation to calculating GDP, At cach stage of producing a good the producer adds an amount of value to the raw materials or semifinished goods purchased The problen faced by legislators and exec from suppliers. With VAT, the producer is re utives at allTevels of government is how to ex tract tbe necessary revenue from the citizenry with the least amount of pain and squealing. Aclude it in the cost passed on to the next pro multiplicity of thxes, surcharges, user fees. anduction or distribution stage. When the fin license fées have recently been imposed on suchi things as credit reports and debt co (Pennsylyania), dog and cat kennelin nesota), ski equipment rentals (Lakewood, Co orado), and a $30 fee imposed on ex-convic in Michigan's Washtenaw County for ea monthly visit to their probation officer. quired to send the designated percentage of that value added to the government and sbhed product is sold to the customer, thie rice includes the total of the value-added g FREmf axes paid at each stage of production and distribution Generally, in countries that use a VAT, the amount of the tax paid on an item is not indicated on the sales tag, only a statement Although such revenue sources at the price includes the VAT. The public, crcfore, does not have a constant tax irritant to feact to. There is likely to be less squealing raiscOS public opposition than general tax increase the collection costs are often so grear as to o a large part of the revenue. Substantia rvthan with the normal sales taxc added to the enue sources are needed to pay for government price of a purchase ar the tume of sale This de services and beneits, but which type of tax is least undesirable? The federal income tax is 20% in 8 of the European Union-member under attack, especially by supply-side adhercountries, including FraeIreland and all ents, as a disincentive to work andthe Scandinavian countries investment, and the flat tax movement is gain ing increasing support. State sales taxes are crit icized for their regressive effect on low-income spite the fact that the VAT rate is greater thanExplanation / Answer
(1).
First of all let’s know difference between incidence and impact of tax.
Incidence of tax refers to ultimate burden of the tax borne by the an individual & an institution. So incidence means final burden of tax which can not be shifted to other. Whereas impact of tax means temporary burden of the tax which is taken due to immediate imposition of tax.
Now let’s come to main question. Incidence of VAT. As we know that VAT tax is imposed on the each & every value added step, thus VAT is imposed on the manufacturer & trader but it is shifted to the end users by the manufacturer thus ultimate burden of this tax is borned by the end users, these end users are known as customers.
Thus incidence of VAT tax comes to the end users (customers).
(2).
VAT is regressive tax because this tax makes same impact on the low income and high income groups. Thus it is a regressive tax. Regressive tax is a tax that reduce net income of the lower income, as we know that VAT tax reduce net income of low income group as well as of high income group.
Thus if a tax which which ultimately reversly affect low income groups is known as regressive tax. So as a result we can say that VAT is a regressive tax because it does not make any difference between low income and high income group.
(3).
VAT tax should be adopted in United State because it will bring uniformity in the taxation system. As we know that VAT tax is imposed on the value added to the manufacturing process or value added to the product & service, thus it will ultimately improve the GDP of the country. So we can say that VAT tax is not a fictitious tax because it will imposed on the actual value added hence this tax is a geniune tax system.
After imposing VAT tax it will helps in improving value addition and as a result it will improve overall income level of the the individuals of the nation. Apart from this it will also increase tax revenue for the nation.
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