I am not sure if I am understanding correctly. Or if I am being understood correctly.
What I was proposing is that instead of 25% duties, it would be possible to introduce a 25% VAT. With VAT, I mean a value added tax as in the EU or Swiss VAT of today. Not a sales / goods / turnover tax as the US knows it or
Switzerland knew it until 1994. As with the all VAT, imports and sales are taxed (in the EU called VAT on Importation, Einfurumsatzsteuer, etc.).
Quick example, when A imports goods for 100 USD, he pays 25 USD VAT on importation. A then processes them (wages are paid) and resells to a customer for 200 + 50 USD VAT (remitting 50 USD to the government but getting 25 back for the import paid). In essence, 50 USD have been paid to the government, 25 of which for the import and 25 of which for the labour / profit generated while being processed at B.
Now, I further propose to ablish salary taxes / personal income taxes. Why? Because as per the above example, the guy working on the goods (B) did in fact already pay for it. That's the 25 USD that he paid on the 100 USD profit generated.
With those two measures, the net effect would be that the country basically has a 25% duty on all imports without the hassle of making other countries angry.
There are various side-effects that would have to be addressed, among others that basically
no tax would be paid for work performed on export goods, residents would be incentivised to spend their money abroad instead of at home, corporate profits would have to equally be lowered as the VAT would charge, etc.
@Martin Everson @void I definitely would not recommend a finance transaction fee. I think this has been discussed in detail recently in
Switzerland, while there are valid arguments for it, I think the over all effects lead to massive inefficiencies as it incentivices inefficient behaviour of market players, not to mention that it could easily be avoided.
To a@void misunderstandings, I personally would not recommend anybody to expose himself to
citizenship taxation nor would I avocate any country to introduce such. But I do respect entities able to charge people due to their good marketing or any other efforts that allows them to do so in a free market. For the US, to be honest, due to FEIE the number of such taxpayers is fairly limited and in the end I would say the main question is how much tax and business the US is losing out by deterring potential tax payers with citizenship taxation.
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