[telaandrews2]

I lead product for one of the leading US sales tax solutions, and have also built products automating EU VAT solutions. I came into these roles with little subject matter expertise, but with enthusiasm for making it easier for small businesses to thrive. So, take these inputs with that perspective, please.

VAT tax rate calculations are trivial, but filing returns is complex.

Sales tax calculations are complex, and so is filing returns. Also, the reseller tax exemptions are not easy (in fact, most tax audit fines come from poor records around tax exemption, not from collecting the wrong amount of tax). As someone operating a SaaS business in the US, I wish we had a VAT system.

It's also worth understanding that in many states, sales taxes are the primary way that local governments can directly generate revenues. To simplify the US tax system, we first need to solve how we equitably fund local governments.

[nraynaud]

I think the EU made a really good computer system with the VAT, it’s way easier than sales taxes accros state borders.

For curious people: every business entity has a VAT number. VAT has to be paid to the customer’s country (for individuals), the computer system tells you the country rate when you establish the bill. When it’s time to pay, you tell your own government how much you collected for each country and give them the loot. And the countries settle their VAT bills at the state level.

Your red tape doesn’t grow with the number of countries you did business with. And there is no sneaky “you opened a tax nexus here, because you looked at me funny, and now you need a local accountant to sort it out”.

[taxcoder]

> To simplify the US tax system, we first need to solve how we equitably fund local governments.

I agree differences between states drive much of the complication, with local jurisdiction taxes, such as in Ohio, adding much more complication. My political views fall more to the right than many HN participants, so I am slow to support the Federal government mandating sales tax changes. Do you have an opinion on the Streamlined Sales Tax Governing Board? streamlinedsalestax.org

[PeterisP]

One way to simplify sales tax without destroying the funding of local governments is to have the relevant portion of sales tax flow to the local governments while removing their ability to set rates and rules on the sales tax - so they get equitable funding, but it's uniform across neighbouring municipalities, and a business can ignore the complexity of how the tax is allocated between various levels of government. This obviously has a political impact and would cause local resistance, though, so it has to be pushed on from above.