[surfmike]

Well, because we don’t have a VAT, it is, isn’t it? The article puts the blame on the US sales tax system. But regardless, US exporters to the EU end up paying more taxes than domestic EU producers.

> Europe’s VATs are not tariffs and are not subsidizing European exports. Instead, US states’ poorly-designed sales taxes are harming their own businesses’ competitiveness—whether they’re selling down the street, across state lines, or around the world.

[jakewins]

Sorry I don’t follow - how does VAT make US exporters pay more than domestic EU manufacturers? They are both subject to the same VAT, or?

[surfmike]

Because they are not able to deduct US state sales taxes on business inputs from the final VAT. While Europeans can deduct their local (VAT) taxes on business inputs.

[jakewins]

I still don’t follow. If the VAT was completely removed, US businesses would still pay state sales taxes on inputs and EU manufacturers would not?

The two things seem unrelated?

[aredox]

It doesn't. It has never been. Trump is a liar and a crook and is bullshitting you.

[smooc]

VAT is applied on every good sold. So no. If you are able to produce cheaper and shipped cheaper than your EU competitor it will be cheaper when a consumer buys it.

The consumer pays the VAT, not the producer.

[surfmike]

Your European competitor will be able to deduct all their local VAT taxes on business inputs but you won’t be able to deduct your local sales taxes on your inputs.

[tdb7893]

As an American I don't really deeply understand VAT but I don't get why an American car would pay more overall VAT than a domestically produced car. My impression is that VAT will be the same for items that cost the same, no matter where they are produced.

[aredox]

I don't get why you believe the liars who told you an American car would pay more overall VAT than a domestically produced car. I mean, you are getting lied to your face, by someone who is a serial liar, so why are you trying to find an explanation for something that doesn't exist?

[Muromec]

The idea behind vat is to spread the sales tax across the chain, which means the government gets the money even if the end product didnt reach the customer.

Naturally the chain breaks at the border, so importers pay vat and exporters get vat refunds.

In the end its just a sales tax

[bardak]

The main purpose of VAT is to not fully apply a consumption tax multiple times through manufacturing and distraction

[surfmike]

Exactly, and for American producers, sales tax does get applied multiple times and can’t be deducted from VAT

[alexanderchr]

Not true, see for example

https://comptroller.texas.gov/taxes/publications/94-124.php

[surfmike]

European producers can deduct VAT on their intermediate business inputs, but American producers can’t deduct the sales taxes on their intermediate inputs.

[stuaxo]

It will be the same, you were right.

[gamblor956]

Non-European companies don't pay VAT or deal with VAT compliance unless they have sufficient business in Europe that they are required to register for local tax compliance.

European customers handle the VAT themselves when dealing with non-VAT-registered non-European suppliers; this is known as the "reverse charge" mechanism and it's generally a feature of almost every VAT system in the world. (In a nutshell, the customer charges themselves VAT and pays it on their own VAT return. This is similar to the way "use tax" works in the U.S.)

[wesselbindt]

Whether or not some action is discriminatory is inherent to that action. Something I do can't be considered discriminatory because of what someone else does. So for example, if I shake hands with all people of all colors, you cannot call that discriminatory just because my neighbor doesn't shake hands with people. That would be completely nonsensical.

Similarly, if the EU applies VAT to all goods sold, that can't be considered discriminatory just because some other country doesn't apply VAT.

[akoncius]

> But regardless, US exporters to the EU end up paying more taxes than domestic EU producers.

but only because of tariffs, not VAT system. we pay VAT regardless from where the good came from.

[AndrewDucker]

VAT applies equally to imported goods and locally produced goods.

[NewJazz]

For a VAT to work they have to levy the tax at each stage. Import is a stage...

But regardless, US exporters to the EU end up paying more taxes than domestic EU producers.

No, because the domestic EU producers are paying VAT at each stage of their production process. The US manufacturers need to catch up!

[kvemkon]

> the domestic EU producers are paying VAT at each stage of their production process.

As long as I know, VAT should be payed only once for a finished product when sold to the very end customer.

[Muromec]

No. The vat is payed by the seller on full price of what they sell. So does their supplier. The trick is -- yoy get tax credits when your supplier is a vat payer. As a result, the tax is collected in parts over the final price sold to the non-business customer.

Which is why being a registered one man company with a vat number allows you to get back vat for your laptop

[surfmike]

We pay sales tax on business inputs as well. But unlike European producers, that tax is not deductible from from the final VAT.

[NewJazz]

Sounds like we need our own VAT.

[Tzk]

You pay VAT on all products when they’re sold or imported. In Germany it’s 19% and called “Mehrwertsteuer” for the domestic products and “Einfuhrumsatzsteuer” for imported products. There’s an additional Import tax on some products.

[epolanski]

No both pay the very same amount of taxes.

[aredox]

Are you dense? The VAT applies to all purchases and doesn't discriminate on where an item is produced.

Have Americans become really that dumb?

[kylehotchkiss]

The majority of Americans have not been exposed to VAT. Most people see a thing that has value and don’t want to think of each step in manufacturing, and try to reconcile that. To even educated Americans, it takes some thinking to understand both what VAT is and why it’s beneficial over us based sales tax.

The mistake I think Vance made was assuming that Europe doesn’t tax its own vehicles 30%. If he wants to “reciprocate” by impose higher taxes on BMWs, Mercedes, and Audis so I don’t have to deal with their drivers egos every time i go on the highway, let him. This is not a product class that is adding much value to our society in my opinion. I would hope they aren’t so difficult on Honda/Toyota since both brands provide good reliable cars while US manufacturers try to get their shit together

[aredox]

Why would US car manufacturers try to get their shit together with even less competition?

[umanwizard]

> Have Americans become really that dumb?

It’s not a question of being dumb or not, but rather that VAT doesn’t exist in the US so most people don’t understand how it works, if they have even heard of it at all.

Instead of VAT, most states have sales tax, which is similar in spirit but doesn’t work the same way.

[aredox]

There is absolutely nothing, at any step, that takes into account where an item has been produced when the VAT is calculated. You don't need to know anything about VAT to understand at least this very tiny, simple and obvious fact.

But apparently facts don't mean anything anymore in that crazy country there.

[nabla9]

The linked article explains VAT.

Being confidently wrong in the comment section is dumb and arrogant.

[coolgoose]

I mean, I get it to some extent, but there's literally an article linked on this whole thread that we're all commenting, explaining why not...

[devuo]

I think it's more a case of intellectual dishonesty.

[ceejayoz]

https://www.urbandictionary.com/define.php?term=The%20Rule%2...

[watwut]

Yeah and no. I would see intellectual dishonesty as worst and the fact that we did not called it that for years enabled these people. They were giving all possible benefits of the doubt. And calling them dumb is kind of benefit of the doubt.

[przemub]

Lol no.