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From: tony cooper on 11 Feb 2010 18:35 On Thu, 11 Feb 2010 21:10:40 +0000, Bruce <docnews2011(a)gmail.com> wrote: >On Thu, 11 Feb 2010 09:40:46 -0800, Savageduck ><savageduck1@{REMOVESPAM}me.com> wrote: >>...and since VAT is a "value added tax" an imported item arriving a >>port of entry would have the taxed "added value" of the freight costs >>to move it from port of entry to point of distribution or sale. That >>would also apply to the cost of transport on domestic products. That >>could be considerable for some landlocked states. That is unless >>transport is given a VAT exemption > > >Wrong, because the consumer pays VAT only once, at the point of sale. >All the VAT that was charged on any intermediate expense, including >transport, is reclaimed by the retailer of the product or service. That doesn't make sense. If VAT is charged on incoming freight to a manufacturer (and I don't know if it is or not), the product may change hands several times before it gets to the retail level or the product may be assembled from components manufactured by several different firms. Surely, the retailer is not reclaiming VAT paid by all the sources in the manufacturing process. You'd have the camera retailer reclaiming VAT from the maker of the camera body, the maker of the lens, the maker of the strap, the maker of the lens caps, etc. All those sources are incurring freight charges. >Otherwise, the consumer would be paying tax on tax, and that doesn't >happen. Are you saying above that VAT is charged along the line in the production of a product? If it is reclaimed, then it must have been charged. While the end cost may not reflect the VAT charged and reclaimed, the cost will be increased by the extra requirements of paying and retrieving the charges. In the US, a company that distributes or manufactures a product is exempt from sales/use tax when they purchase anything that goes into the product. The tax only comes into being when the final distributor sells to the end user. In other words, if I manufacture widgets, I won't pay sales/use taxes on anything that I purchase that will be incorporated into the widget or the widget's packaging. I will pay sales tax on things like office supplies to run the business, and anything else that is not part of the product. If I sell my widgets to a retail store, they don't pay tax. Only the end user pays tax. In the US, whether or not there is a sales/use tax on freight charges is up to the individual state. Some states exempt it, some don't. -- Tony Cooper - Orlando, Florida
From: Peter on 11 Feb 2010 18:34 "tony cooper" <tony_cooper213(a)earthlink.net> wrote in message news:7629n5tututtbc2189ll2l0tmpbokur7ue(a)4ax.com... > On Thu, 11 Feb 2010 13:32:47 -0500, "Peter" > <peternew(a)nospamoptonline.net> wrote: > >>>>Suppose I take weekly trips to Bimini and stay there for a few days. Do >>>>I >>>>have an obligation to pay the use tax? >>> >>> What's Bimini have to do with it? Florida hasn't annexed Bimini. >>> What pertains is where you dock your boat between trips and where you >>> have your primary residence. Where you go when you are on the water >>> is irrelevant in this case. >>> >> >>I dock my boat in Bimini for 30 days, FL for 10 days, well under the 60 >>day >>requirement, then in Bmini for 200 days and FL for 59 days. I then come >>back >>into FL for supplies and go back to, wherever. > > It's not my field, but I wouldn't think that you would be considered > to be a Florida resident and required to register your boat in Florida > under the above conditions. You're a transient. >> >>BTW the real incentive for the marina to report the boats is the >>expectation >>of getting a pass on their own sales tax violations. Yes, that does happen >>and more often than most think. >>Unlike criminal law, if there is any rational basis for the tax >>department's >>determination the taxpayer now has the burden of proving the department >>wrong. This is a very difficult burden. > > When I owned a company, I was audited by the Florida Department of > Revenue (our sales tax people) a few times. No one in business in > Florida who has ever been audited is under the impression that the > auditor will leave giving you a clean bill. They *will* find > something. I have seen very few no change audits. Here, a sales tax audit is considered the worst. Understrand that the IRS auditors are generally more highly trained and more highly paid than state auditors. Consequently, they are more intelligent and seem to understand business, better. > I have also been audited by the IRS, but they did not find > anything wrong or assess any additional taxes, penalties, or interest. Frequently, the IRS gets you on record keeping issues. > Given the choice, I'll go through six IRS audits rather than one FL > DofR audits. > An accountant once bragged to me that none of his clients were ever audited. I told him that was because he might not have been doing a good job for his clients. Seriously, you really don't want any audits, with any agency. -- Peter
From: J. Clarke on 11 Feb 2010 19:19 tony cooper wrote: > On Thu, 11 Feb 2010 21:10:40 +0000, Bruce <docnews2011(a)gmail.com> > wrote: > >> On Thu, 11 Feb 2010 09:40:46 -0800, Savageduck >> <savageduck1@{REMOVESPAM}me.com> wrote: >>> ...and since VAT is a "value added tax" an imported item arriving a >>> port of entry would have the taxed "added value" of the freight >>> costs to move it from port of entry to point of distribution or >>> sale. That would also apply to the cost of transport on domestic >>> products. That could be considerable for some landlocked states. >>> That is unless transport is given a VAT exemption >> >> >> Wrong, because the consumer pays VAT only once, at the point of sale. >> All the VAT that was charged on any intermediate expense, including >> transport, is reclaimed by the retailer of the product or service. > > That doesn't make sense. If VAT is charged on incoming freight to a > manufacturer (and I don't know if it is or not), the product may > change hands several times before it gets to the retail level or the > product may be assembled from components manufactured by several > different firms. Surely, the retailer is not reclaiming VAT paid by > all the sources in the manufacturing process. > > You'd have the camera retailer reclaiming VAT from the maker of the > camera body, the maker of the lens, the maker of the strap, the maker > of the lens caps, etc. All those sources are incurring freight > charges. > >> Otherwise, the consumer would be paying tax on tax, and that doesn't >> happen. > > Are you saying above that VAT is charged along the line in the > production of a product? If it is reclaimed, then it must have been > charged. While the end cost may not reflect the VAT charged and > reclaimed, the cost will be increased by the extra requirements of > paying and retrieving the charges. > > In the US, a company that distributes or manufactures a product is > exempt from sales/use tax when they purchase anything that goes into > the product. The tax only comes into being when the final distributor > sells to the end user. > > In other words, if I manufacture widgets, I won't pay sales/use taxes > on anything that I purchase that will be incorporated into the widget > or the widget's packaging. I will pay sales tax on things like office > supplies to run the business, and anything else that is not part of > the product. If I sell my widgets to a retail store, they don't pay > tax. Only the end user pays tax. > > In the US, whether or not there is a sales/use tax on freight charges > is up to the individual state. Some states exempt it, some don't. The whole point of a value added tax is that it is a tax on value that has been added. A bunch of raw materials come into a mill. Steel leaves the mill--it is worth more than the raw materials, the difference is value added, that value added gets taxed. Now the steel goes to a machine shop, that produces parts that are worth more than the steel, so again there is value added, which gets taxed. Then the parts go to a factory that turns them into cars or toasters or cameras, which are worth more than the parts, so again there is value added. The end result is that the same amount of tax gets paid but everybody has to keep track of the tax now instead of just the retailer.
From: tony cooper on 11 Feb 2010 21:50 On Thu, 11 Feb 2010 22:09:04 +0000, Bruce <docnews2011(a)gmail.com> wrote: >On Thu, 11 Feb 2010 13:51:12 -0800, Savageduck ><savageduck1@{REMOVESPAM}me.com> wrote: > >>On 2010-02-11 13:10:40 -0800, Bruce <docnews2011(a)gmail.com> said: >> >>> On Thu, 11 Feb 2010 09:40:46 -0800, Savageduck >>> <savageduck1@{REMOVESPAM}me.com> wrote: >>>> ...and since VAT is a "value added tax" an imported item arriving a >>>> port of entry would have the taxed "added value" of the freight costs >>>> to move it from port of entry to point of distribution or sale. That >>>> would also apply to the cost of transport on domestic products. That >>>> could be considerable for some landlocked states. That is unless >>>> transport is given a VAT exemption >>> >>> >>> Wrong, because the consumer pays VAT only once, at the point of sale. >>> All the VAT that was charged on any intermediate expense, including >>> transport, is reclaimed by the retailer of the product or service. >>> >>> Otherwise, the consumer would be paying tax on tax, and that doesn't >>> happen. >> >>Regardless it is a bureauratic nightmare, and in the US with the >>involvement of 50 States, it would be worse. > > >But it isn't a bureaucratic nightmare. Of course it would be. Not in administering a VAT program, but in *initiating* a VAT program. Each state that has a sales tax program would have to discontinue that program. Within many states there are additional sales/use tax programs that would have to be discontinued. The nightmare would be extended to in-fighting within the states. The legislature in each state currently decides what is a taxable item and what is not taxable, but a federally-operated program would take that away from the state. The transition from state-collected funding to federal-collected funding, and disbursing that money to the states, would be the nightmare. >One good thing about VAT is that the price you pay already includes >the tax. No more going to pay for an item and finding that nasty >addition to the price ... That's only a problem for non-Americans visiting the country. Americans are used to it. It's no different for the tourists than adapting to a different monetary system. -- Tony Cooper - Orlando, Florida
From: tony cooper on 11 Feb 2010 21:51
On Thu, 11 Feb 2010 14:37:36 -0800, Savageduck <savageduck1@{REMOVESPAM}me.com> wrote: >On 2010-02-11 14:09:04 -0800, Bruce <docnews2011(a)gmail.com> said: > >> On Thu, 11 Feb 2010 13:51:12 -0800, Savageduck >> <savageduck1@{REMOVESPAM}me.com> wrote: >> >>> On 2010-02-11 13:10:40 -0800, Bruce <docnews2011(a)gmail.com> said: >>> >>>> On Thu, 11 Feb 2010 09:40:46 -0800, Savageduck >>>> <savageduck1@{REMOVESPAM}me.com> wrote: >>>>> ...and since VAT is a "value added tax" an imported item arriving a >>>>> port of entry would have the taxed "added value" of the freight costs >>>>> to move it from port of entry to point of distribution or sale. That >>>>> would also apply to the cost of transport on domestic products. That >>>>> could be considerable for some landlocked states. That is unless >>>>> transport is given a VAT exemption >>>> >>>> >>>> Wrong, because the consumer pays VAT only once, at the point of sale. >>>> All the VAT that was charged on any intermediate expense, including >>>> transport, is reclaimed by the retailer of the product or service. >>>> >>>> Otherwise, the consumer would be paying tax on tax, and that doesn't >>>> happen. >>> >>> Regardless it is a bureauratic nightmare, and in the US with the >>> involvement of 50 States, it would be worse. >> >> >> But it isn't a bureaucratic nightmare. I have operated several >> different types of business and dealing with VAT has never been a >> problem in any of them. Back in the 70s I worked in a hi-fi store and >> the owner - who was an importer and wholesaler too - was always >> griping about purchase tax. He quickly got used to the new VAT system >> and greatly preferred it. >> >> >>> I prefer to deal with my 8.25% California Sales Tax and leave VAT out >>> of the equation. >> >> >> To the customer, there is no difference. Whether it is VAT or sales >> tax, the customer just pays it at the point of sale. The rest of it >> is simple accounting. It is nothing like as bad as you think, it's >> just a slightly different system to the one that you are familiar >> with. >> >> If the USA introduced VAT there would be no need to set the rates as >> high as they are in Europe. They would be broadly in line with what >> you now pay in sales tax. >> >> One good thing about VAT is that the price you pay already includes >> the tax. No more going to pay for an item and finding that nasty >> addition to the price ... >> >> > >Well in the US it will be a bureaucratic nightmare. > >Each of the State which impose a sales tax have a different >distribution of those revenues. the break down for California sales Tax >is as follows; >8.25% >5.00% - State General Fund >0.25% - State Fiscal Recovery Fund >0.50% - State Local Revenue Fund >0.50% - State Local Public Safety Fund >1.00% - Uniform Local Tax >0.25% - Local County - Transportation Funds >0.75% - Local City/County - Operational Funds > >Then some individual California Counties and cities have imposed >additional bumps to that sales tax. >Also each State has different excise taxes on fuel, alcohol and >tobacco, and California sales tax is imposed on top of those. If you >include the Federal excise taxes on those items alone that amounts to a >de facto triple taxation. > >That is only California, each of the states has their own formula and tax code. > >As I said earlier, each State would have to change their tax code and >the Federal government would have to devise a fair method of >distributing those revenues based on local sales. >If that is not going to be a bureaucratic, and costly nightmare I need >further explanation. You also have the situation of tax-exempt products. Each state has a list of items that are non-taxable in that state that may or may not be taxable in another state. -- Tony Cooper - Orlando, Florida |