Word: vat
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...VAT would not present extra difficulties for companies, since under a VAT (such as the type currently use in Japan), businesses would not be burdened with complex tax calculations. They would not have to make any significant changes to incorporate the VAT, since their own accounting records supply all the necessary information to calculate the tax. Instead, they would reap tremendous gains from throwing away the current complicated tax-calculation apparatus...
...compliance costs for the corporate and payroll taxes are currently extremely high. Switching to a VAT would allow companies to spend more on wages and investment, and less on tax lawyers...
Critics of the VAT point to the complexities of VATs in Europe. While it is indeed true that European countries have experienced high administrative and compliance costs, this complexity has been the result not of the VAT itself, but of the numerous exemptions (housing, charity, food) which European governments have decided to institute...
...most efficient VAT is one without any exemptions, which is the type of VAT the U.S. should adopt. The problems European countries face with their VATs are the result of their decisions to make their system more complex...
Although simplicity is important, the VAT's most significant benefits are its neutrality and fairness. Simply put, a VAT does not distort economic behavior. Economists generally agree that the best type of tax is one that does not change incentives, since incentives create deadweight losses and reduce consumer welfare more than necessary. Distortions result in inefficient allocations of resources, which slows growth and hurts everyone...