For­get any­thing re­sem­bling a Vat

Forbes - - Contents // -

One tax ini­tia­tive that should be stran­gled be­fore it sees the light of day is to give a tax re­bate to ex­porters and to im­pose taxes on im­ports. This would al­legedly even the play­ing field for coun­tries that have the VAT or a vari­a­tion of it. These levies are re­bated on items that are ex­ported.

Shop­ping-minded tourists to coun­tries like Bri­tain know this process well: You buy some­thing like a nice pair of shoes, get a VAT re­bate form from the re­tailer, have it stamped at the air­port and then plop it in a spe­cial mail­box. Weeks later you re­ceive a check or a credit on your card. This sup­pos­edly boosts sales. Since the U.S. doesn’t have a na­tional sales tax, we can’t do the same thing.

To get around this, some peo­ple are ad­vo­cat­ing that we slap a levy on im­ports to make their prices what they would have been sans the VAT re­bate or not let im­port­ing com­pa­nies deduct the cost of these items. Ex­porters would get a tax credit of some sort so that their prod­ucts would be cheaper, just as if a VAT had been re­bated.

It’s a bad idea. Why do we want to make Amer­i­can con­sumers pay more for prod­ucts while sub­si­diz­ing for­eign buy­ers? It also could put us on the slip­pery slope to our own VAT.

Con­cern­ing the sup­posed ad­van­tage VAT na­tions have, the an­swer is not to try to im­i­tate them but rather to re­duce our tax bur­den, which thereby re­duces the costs of mak­ing prod­ucts and ser­vices. Com­bined with re­duc­tions in reg­u­la­tions (which Trump has promised to do), lower taxes would help Amer­i­can com­pa­nies be highly com­pet­i­tive again. Lest we for­get, regs are an­other form of tax­a­tion.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.