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[LoSboccacc]

There actually were problems with The Mob (organized crime in general) decades ago, in the 60's and 70's and 80's, but we've got that under control now.

I know, but their money run dry. this new one will have fresh money and will begin pressuring again. there's a chance they'll go in emerging economies tho.

[Reelya]

One of the policies that really backfired was in the 1980s when the USA were worried about Japanese car imports competing with American ones at the cheap end of the market. They decided tariffs would be too unpopular, because they'd drive up prices, so what they did was impose import quotas. But quotas also cause prices to rise (they reduce supply vs demand). Quotas are even more stupid than tariffs. At least a tariff gets you some money to do things with, while quotas push up the price (they're still meant to force you to buy the local expensive version) without the benefit of the spendable tax money.

And on top of that, Japanese car manufacturers actually changed their strategy in response to the quotas. e.g. when there were no quotas, Japanese car manufacturers tried to maximize their profits by selling cheap cars, sell as many as possible. But after quotas, there was a set cap on the number of units sold, so you want to maximize the profit per unit instead. So Japan switched to a strategy of making competitive high-end vehicles and sports cars, while the bottom end of the market was relegated to slightly more over-priced crap than originally. Of course when the quotas were abolished, this put Japanese car makers in a much more competitive position.

And of course there's the big problem with both tariffs and quotas. if it's harder to find an affordable car because of all the protectionism, what effect does that have on the rest of the economy? What do we miss out on because we distorted the market to protect just one industry?

[smjjames]

Trump wasn't seeking to put a tariff on any one specific thing, it was as broad a brush as you can possibly make.

He really oughta wait for his trade cabinet people to be in first before doing spur-of-the-moment trade decisions like that.

[Reelya]

If you're going to do it, a blanket VAT on everything including imports wouldn't be that bad of a deal. Basically because it would streamline the tax system, simplify things by treating them all the same, and remove loopholes.

Basically you say that everything gets VAT, but you can deduct the costs paid for that from the tax. e.g. if you buy something for $3/unit and sell it for $4/unit, you pay VAT on $1/unit. The idea is that other people already paid VAT on the $3 worth. But for imports, that's not the case, so it's valid to charge VAT on the buying price as well, and that's not actually a market distortion, because it ensures a level playing field against tax havens and loopholes.

[smjjames]

I'm pretty sure there is a difference between a VAT and a tariff.

[Reelya]

See the edit. If you buy a product from another country, none of that has had VAT paid on it. So there's a case that applying VAT to the whole import value is fair to compete against tax havens / multinational tax avoidance. In effect, that would be like a tariff, but it would probably have beneficial effects, because you can bet your ass somewhere down the line companies played the system to avoid paying taxes on it. Price distortion is bad, but tax avoidance itself is a cause of distortion. if something is artificially cheap because some people are avoiding tax vs other people who have to pay, this causes economic distortion because different investments are no longer on a level playing field.

[PTTG??]

This is not even the first time Steve Bannon has called himself Darth Vader.

Vader wasn't the power behind the throne. Trump's Vader; not exactly smart, throws temper tantrums all over the place, only really cares about his own family, can to a lot of damage with those tantrums, his daughter is involved in some kind of incestuous sexual tension, the similarities are obvious.

Pence is Tarkin. Evil, holds the leash, but effectively disposable to...

Bannon/Palpatine. Doesn't get seen much, looks like a scrotum with eyes, does all the planning.

[smjjames]

See the edit. If you buy a product from another country, none of that has had VAT paid on it. So there's a case that applying VAT to the whole import value is fair to compete against tax havens / multinational tax avoidance. In effect, that would be like a tariff, but it would probably have beneficial effects, because you can bet your ass somewhere down the line companies played the system to avoid paying taxes on it. Price distortion is bad, but tax avoidance itself is a cause of distortion. if something is artificially cheap because some people are avoiding tax vs other people who have to pay, this causes economic distortion because different investments are no longer on a level playing field.

Except that a 20% VAT/tariff is still quite a lot. According to the link frumple gave earlier, there's a bunch of African countries that have 17 and 18% and only three countries have it 20% or higher.

[Reelya]

Nah, 10% VAT is more normal in an industrial country.

But IDK if there might be excuses for higher VAT in a really poor developing nation. It could be that taxable trade is very limited, and not that price-flexible so that a higher VAT gives needed tax money to spend on infrastructure, which grows the economy more. Basically, there's a lack of actual countries who've ever gotten rich and powerful by doing what Libertarians say you should do. Virtually all strong nations now grew strong by having a lot of centralized systems working together.

[Frumple]

Eh, what I linked was tariffs, not VAT.

... that said, yes. 20% VAT would be kinda' screwed up. Closest equivalent for the US is probably a sales tax -- for a statesider, imagine for a moment, if you will, the effects a 20% sales tax would have on your life. _{on the flip side of that, it might actually impact our obesity numbers to some degree. No one could afford to eat out anymore. of course, that means they're probably eating as bad or worse at home instead, but still}

If you want vat numbers, try this.

[smjjames]

Basically, there's a lack of actual countries who've ever gotten rich and powerful by doing what Libertarians say you should do. Virtually all strong nations now grew strong by having a lot of centralized systems working together.

I wonder if anybody has actually tried to do what libertarians say you should do though?

I suppose it might work for an island or archepelago nation..... Are the ancient Greek City States analogous to what libertarians want? Then again, even they had centralized systems, pretty hard to imagine a government working efficiently without a centralized system.

Eh, what I linked was tariffs, not VAT.

... that said, yes. 20% VAT would be kinda' screwed up. Closest equivalent for the US is probably a sales tax -- for a statesider, imagine for a moment, if you will, the effects a 20% sales tax would have on your life. _{on the flip side of that, it might actually impact our obesity numbers to some degree. No one could afford to eat out anymore. of course, that means they're probably eating as bad or worse at home instead, but still}

If you want vat numbers, try this.

That's what I saw earlier and linked, and is also giving some confusion between a tariff and a VAT.

[Reelya]

Well there's a big question there. We look at some African nations with high VAT and it's implied that it's the high taxes keeping them down. Not from people here specifically, but a general idea "lol high taxes".

But if you look at those nations total GDP, and government expenditure they usually have pretty low government spending per GDP. For example, Madagascar has a VAT of 20%. Just picking a poor country with high VAT purely at random to make a point. Their GDP is $10 billion. High taxes must be impeding growth, right? That's why they're a poor country, right? But their total government expenditures are 10% of GDP, which is about 1 quarter of what the USA spends relative to their economic size. The place should be a Libertarian's paradise by now.

Perhaps the issue is that in a poor country with bad infrastructure, it's hard to collect the sorts of taxes that technocracies such as the USA does. But applying tariffs and sales taxes on physical goods is relatively easy to keep track of and catch cheats. If you have a warehouse full of illicit goods, it's easier to spot that than working out who did what financial deal. So it would be expected that Madagascar gets its revenue from a different mix of taxes than the USA.

[MrRoboto75]

Trump's Vader; not exactly smart, throws temper tantrums all over the place, only really cares about his own family, can to a lot of damage with those tantrums

Sounds like Kylo Ren

[smjjames]

Well there's a big question there. We look at some African nations with high VAT and it's implied that it's the high taxes keeping them down. Not from people here specifically, but a general idea "lol high taxes".

But if you look at those nations total GDP, and government expenditure they usually have pretty low government spending per GDP. For example, Madagascar has a VAT of 20%. Just picking a poor country with high VAT purely at random to make a point. Their GDP is $10 billion. High taxes must be impeding growth, right? That's why they're a poor country, right? But their total government expenditures are 10% of GDP, which is about 1 quarter of what the USA spends relative to their economic size. The place should be a Libertarian's paradise by now.

Perhaps the issue is that in a poor country with bad infrastructure, it's hard to collect the sorts of taxes that technocracies such as the USA does. But applying tariffs and sales taxes is relatively easy to keep track of and catch cheats. So it would be expected that Madagascar gets its revenue from a different mix of taxes than the USA.

Only problem is that the one frumple linked and has tariffs, http://www.indexmundi.com/facts/indicators/TM.TAX.MRCH.SM.AR.ZS/rankings, has countries that don't show up in the one I had found earlier with VAT http://www.uscib.org/valueadded-taxes-vat-ud-1676/ It might be a somewhat biased source because it may be selective.

Also, Trump isn't doing it because he wants to keep track of and catch cheats, he wanted to extort Mexico.

[sluissa]

Well there's a big question there. We look at some African nations with high VAT and it's implied that it's the high taxes keeping them down. Not from people here specifically, but a general idea "lol high taxes".

But if you look at those nations total GDP, and government expenditure they usually have pretty low government spending per GDP. For example, Madagascar has a VAT of 20%. Just picking a poor country with high VAT purely at random to make a point. Their GDP is $10 billion. High taxes must be impeding growth, right? That's why they're a poor country, right? But their total government expenditures are 10% of GDP, which is about 1 quarter of what the USA spends relative to their economic size. The place should be a Libertarian's paradise by now.

Perhaps the issue is that in a poor country with bad infrastructure, it's hard to collect the sorts of taxes that technocracies such as the USA does. But applying tariffs and sales taxes is relatively easy to keep track of and catch cheats. So it would be expected that Madagascar gets its revenue from a different mix of taxes than the USA.

Only problem is that the one frumple linked and has tariffs, http://www.indexmundi.com/facts/indicators/TM.TAX.MRCH.SM.AR.ZS/rankings, has countries that don't show up in the one I had found earlier with VAT http://www.uscib.org/valueadded-taxes-vat-ud-1676/ It might be a somewhat biased source because it may be selective.

Also, Trump isn't doing it because he wants to keep track of and catch cheats, he wanted to extort Mexico.

Also of note, I don't believe the 20% was a flat tariff for the whole world, that was specifically against Mexico. He was suggesting the still high but much more within the avg range for the world number of 10% for the normal tariff for imports, while Congress was pushing a 5% number. I'd actually expect Congress to get closer to their number although I wouldn't be surprised if they meet in the middle somewhere either.

I'm personally for punitive tariffs for countries that manage to undercut prices of their exports by lowering humanitarian, environmental or quality standards, as long as those tariffs are frequently re-evaluated and adjusted on the basis of how a country has improved or deteriorated.

I know this isn't why trump is doing this... but... if the end result works out... I'm not going to whine too much. I just wish it were more widespread than just Mexico, they're not the worst offenders, by far.