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Comment by jujube3 | Hacker News Reader

Even if the VAT tax ends up being the same for imported goods versus domestically produced goods, that is still a discriminatory tax against the import. The reason is because the imported good already paid taxes in the country it was produced in.

It makes sense for a German car manufacturer to pay taxes to Germany, since the German state provides it with services (roads, police, infrastructure.) It makes no sense for an American car manufacturer to pay taxes to Germany since it gets no services from Germany. (And no, earning the "privilege" of unloading the car from the boat isn't worth 20%.)

If the EU has an interest in making this fair, they can remit the sales tax they collected to the US government. Or they can just accept that this is a discriminatory tax and may incite another discriminatory tax on the US side.

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Literally every single developed country aside from the US uses a VAT.

Is the US going to crusade to change every single country to use your shitty taxation system instead of a VAT?

(the answer is no, VAT is just the only excuse they could find for tariffs on the EU, like how "fentanyl" was the only excuse they could find on Canada no matter how BS it was)

This is not how a VAT works. An American car manufacturer _selling_ a car to Germany means that the importer on the German side pays the tax, not the American. VAT is always applied to the buyer, not the seller.

Whether the buyer or the seller pays the VAT is not relevant. If the price to the consumer is higher, the economic effect is the same.

As another commenter said, this is the same as tariffs. If someone said that tariffs disadvantage foreign producers, you wouldn't smirk and say "idiot! tariffs are paid by the buyer, not the seller!" Instead of trying to demonstrate how very smart you are, you should engage with the arguments that I'm presenting.

By that logic imported items should not have US state sales taxes apply.

>If the price to the consumer is higher, the economic effect is the same.

Higher than what?

Isn't that how regular tariffs work too?

Tariff is applied to import and export. VAT is applied to everything, including domestically produced things. German cars pay the same VAT which makes it fundamentally different them VAT.

So, stop lying.

A regular tariff is also paid by the buyer yes, the comment i replied to seems to not understand either concept. Where the VAT is different is that since all products are taxed the same regardless of origin there is no advantage given to any origin. A tariffs would make the foreign product less attractive. VAT does not.

I already explained why the VAT makes the foreign product less attractive. It's because the foreign product already paid taxes in the country where it was made. So it gets taxed twice, whereas the domestic product is taxed once.

And before you comment, I do understand that the EU allows VAT tax collected in one member country on a product to reduce the amount of VAT tax collected in another member country. There's no such arrangement in place for the US, which is what makes it discriminatory.

Please respond to my actual argument rather than insulting me.

I am unsure what you mean by "the foreign product already paid taxes in the country it was made" in this case. The VAT is done on the buyers side. The foreign product is taxed by the importing entity in the country with the VAT, then by the consumer when they buy the product from the importer. For the consumer there is no difference between the foreign and domestic product and therefore there can be no difference in how attractive it is.

Because it is single market. Just like inter-state commerce inside USA.

Now why the corporations inside USA have failed to lobby mechanism that allows them to get refunds on sales taxes when they export stuff is reasonable question to ask.

> Because it is single market. Just like inter-state commerce inside USA.

No. The US doesn't do this for interstate commerce. For example, California doesn't reduce its sales tax on an item just because Illinois already charged some other tax on that item.

> Now why the corporations inside USA have failed to lobby mechanism that allows them to get refunds on sales taxes when they export stuff is reasonable question to ask.

It's not the job of US corporations to fix discriminatory tax and tariff schemes cooked up in Europe.

On the other hand, in Washington, some people are starting to take notice. If the Europeans want to slap a 20% price increase on US goods, we also know how to do that for European goods.

The US having a less efficient tax system isn't the fault of the EU

You should negotiate with Trump if you think American taxes are too high. Unless EU attacks US militarily and takes their territory, USA taxes are not their issue.

EU manufacturers pay taxes in EU.

By this logic an American state should remit the sales tax they collect on imported cars back to Germany. The Germans would probably love this, twice as many German products are sold in the US as US products sold in Germany.

Sales Tax, Value Added Tax, Goods and Services Tax, are all taxes on consumption. They are paid by the consumer at the location of the consumption. They aren't a tax on production or producers.

All taxes are ultimately paid by the consumer, companies just collect them. So German consumers who buy American cars pay their tax to Germany.

When a company buys from another company, no net VAT is collected - it’s only collected when a consumer enters the picture.

> The reason is because the imported good already paid taxes in the country it was produced in.

The German corporate tax rate is 29.9% vs 21% for the US (from googling). If Germany is anything like my nearby country there are also additional taxes which the US may or may not have (probably not).

Why doesn't the US just raise their own sales tax on both imports and domestic products?

On the off chance that someone in Germany buys an American car, wouldn’t the purchaser be the one paying VAT? I.e. not the manufacturer

>and may incite another discriminatory tax on the US side.

The US already has some of these. Eg YouTubers all have to pay taxes to the US government even if they are not US citizens, have never been to the US, and interact with Google Island Ltd.

My understanding is that the basis of this tax is that it's "money earned from American viewers" or something along those lines.

Imagine if every country in the world did something like this.

Sorry, but a VAT is paid for by the final consumer. US suppliers paying taxes would be a manufacturer's sales tax (MST), but they went out of style decades ago. If any states are dumb enough to still have an MST, maybe they should start there.

Yeah the distinction doesnt mean anything from the US perspective.

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