[missedthecue]

It will probably have to look something like western Europe with massive across the board tax increases. I make $60k a year in the USA and my tax rates are about 12%, with no VAT. They'd probably need to look more like France, where a $60k income is hit with a 42% effective tax (adjusted for progressive rates) before 20% VAT is paid at the store.

[fsckboy]

vat is simply corporate income tax, it's a tax on "value added", i.e. profit or income. I don't know in europe whether that is on top of other corporate income tax or not.

[MattPalmer1086]

VAT is not corporate income tax, and it is not levied on profit or income.

As a business, you can deduct VAT that you had to pay to others from the VAT you charged your customers, and you only pay the difference.

So the only people who end up paying are the final consumers. It is essentially cost neutral to a business - you just have to account for it properly.

UPDATE: in the UK, at least.

[lenerdenator]

And they then pass that expense off to the consumer, because praise be to the shareholders.

[Buttons840]

Companies can just raise prices without consequences? Is that free market competition in action?

Snark aside. I've always heard the idea was that free markets and competition would drive down prices, and that if a company was to just raise their prices, they would actually lose money because people would buy from a competitor with better prices. Turns out companies can just raise prices though. What does it mean when the things that happen in a healthy free market aren't happening?

[lenerdenator]

> Companies can just raise prices without consequences?

Well, when they have a monopoly, yes, yes they can.

> Is that free market competition in action?

No.