The FairTax and the VAT

All,

One of the misstatements of which many of us FairTax-ers are guilty is the claim that the VAT is a hidden tax, and the FairTax is not. I attach (see discussion) a copy of my hotel bill from a recent trip to Germany, in which the VAT is clearly broken out. The only German you need to know to read the bill is that the German word for VAT is "Mehrwertsteuer," or "MwSt" abbreviated. The rest is numbers.

The 4 breakfasts and the telephone calls of 53.20 Euros were subject to a VAT of 19% (tax-exclusive by the way). The room charge of 214.00 Euros was subject to a reduced-rate VAT of 7%. Out of my total bill of 267.20 Euros for two nights for my wife and me, the VAT was 22.49 Euros, and the net-of-VAT charges for the room, breakfast and telephone calls were 244.71 Euros.

Given the same rate, the FairTax arrives at the same numerical result, and Title II, Section 510(a) of HR25 requires the FairTax to be separately stated and charged - just as the German VAT is required to be.

One of our values as FairTax-ers is that we do not exaggerate the benefits of the FairTax or make unsupported claims. Our real quarrel with the VAT is not whether it is hidden. Our real quarrel is that the current proposal is to impose a VAT IN ADDITION to the panoply of taxes we have today. The FairTax, by contrast, REPLACES these taxes. Our second viable argument against the VAT is that, with the FairTax, the same money changes hands only once because we tax only the final retail sale. With the VAT, the same money changes hands at every stage of production. The reporting between the two is similar.

Please feel free to contact me if you have any questions or comments about the VAT and the FairTax.

~Jim

PS: By the way, Schloss Auel is a beautiful castle hotel in the Westerwald country, between Bonn and Cologne and a few kilometers to the East. We highly recommend it.

Comment by Paul Zuzzio adding a point I had missed:

Jim,

One of the other big quarrels with the VAT, and my personal main sticking point, is that it is varied by target. Your own bill shows this with the varied rates per different parts of your bill. This leads yet again to lobbying and bribes....um sorry, CAMPAIGN DONATIONS..............and more bribes.......oops, I meant EARMARKS....etc ad nauseum.

So just like the "progressive" income tax, we are left at the bottom of the behavior control barrel paying higher tax rates for purchases that are not "approved" while paying lower or no VAT rate for those that have been paid off by the industry.

Very Respectfully,

Paul A. Zuzzio

Comment by Karen Walby:

Just want to point out that while Germany discloses the VAT, many countries do not.

Best,