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Comment by rattlesnakedave | Hacker News Reader

Yeah kinda. The article is right, core issue is no ability to reclaim production-side VAT costs like EU competitors can because of how taxes work in the US. My position is the EU should bend a little and help the US out here by either lowering their tariffs to match ours (2.5%) or creating a special mechanism for US companies to reclaim production costs similar to how EU companies can reclaim VAT. It's unreasonable to expect the US to completely restructure its entire tax system just to get 'equal' treatment, especially when we're supposed to be close trading partners. The current system effectively punishes us for having a different tax structure than the EU prefers.

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EU companies can't reclaim production costs. They reclaim VAT on production costs. US producers don't pay VAT on production costs so why would they be able to reclaim it?

If US exporters want to claim back the sales taxes they pay on their imports they should be talking to their governments not complaining about the EU. VAT is paid by consumers. EU consumers pay VAT exactly the same way when they buy domestic or imported goods.

The current system in the EU does not "punish" US exporters, it "punishes" EU consumers for consuming (in the same sense that income taxes "punish" you for earning income). The US tax system "punishes" you by imposing sales taxes on you that you can't claim back if you use the products as inputs to goods or services that you sell. The EU plays no role in this whatsoever.

The US has identical treatment to everyone else, including EU domestic businesses. It is crucial to understand this. US exporters do not pay VAT on their inputs, so they have nothing to claim back from the EU. It makes no sense to say they are disadvantaged.

That would be 100% true. Were it not that VAT is not a "European" thing, but more of a "world economy" thing.

Check out the distribution map on Wikipedia :

   https://en.m.wikipedia.org/wiki/Value-added_tax

This discussion is a perfect example of everything that is going wrong in the world at the moment.

So what?

You can only reclaim VAT from the previous piece of the chain that paid vat. For US company there is nothing to reclaim, as nothing was paid in the first place. At the end of the day, customer still pays the full amount at the point of sale.

The money goes to USA government. Why should I as EU consumer pay taxes to USA regime? The thing about VAT is that USA consumer do not pay it when they buy from EU. So why would I be expect to pay USA sale tax that they failed refund to their exporters?

Yeah then lower your tariffs I guess.

The EU's tariffs are perfectly legitimate according to world trade law. If the US wants to push for advances in world trade law so that tariffs and non tariff barriers come down, then it would do well to start by ending its war on the WTO appellate body and world trade law more generally. What are the chances of that happening under Trump? You can't say you love tariffs and it is your favourite word and then say "sorry your tariffs are too high, what happened to free trade???"

This is hilarious. The US and Trump can continue down this path and force the EU to the table, and there’s precisely 0 anything anyone can do about it. No need to bother with any international bodies.

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