Search Results

The value‐added tax was finally introduced in Japan in April 1989, after long‐standing trial and error by the government. The whole picture of Japan's VAT must be clarified before and after its introduction, focussing on its key trend of VAT in the world and historical background, its main features, its economic aspects and administrative consequences, and local VAT.

This chapter focuses on the subject of tax spending and value-added tax, revealing that value-added taxes are now imposed by all the other OECD countries and by nearly 150 countries worldwide. In the OECD, the VAT rates range from a low of 5 percent in Japan to a high of 25 percent in Sweden, Hungary, Norway, and Denmark. The lowest European VAT rate is 16 percent. The chapter argues that in the United States, a VAT at a rate of 10 to 14 percent could fund an income tax reform which would exempt families with an income of $100,000 or less from the income tax and allow substantially lower income tax rates for both individuals and corporations. Like retail sales taxes, the amount of VAT should be separately stated so that consumers know how much tax is imposed each time they purchase goods or services.

This chapter discusses the two wartime legislative decisions that resulted in the return-based mass income tax: (1) to finance the war with a mass income tax rather than a federal retail sales tax; and (2) to require all income taxpayers to file returns (rather than using a return-free system of exact withholding for most taxpayers). If not for the Roosevelt administration's aversion to a federal retail sales tax, the United States might have emerged from the war with a retail sales tax as the instrument of mass taxation and with an income tax applicable only to the economic elite.

This chapter discusses the methods by which a consumption tax could be enacted at the business level. The two places for imposing a consumption tax at the business level are at the point of sale and on businesses annually. The retail sales tax and the credit method value added tax both impose the tax at the point of sale. In contrast, the subtraction method value added tax imposes the tax on the business annually. Importantly, all of these business level consumption taxes eliminate the need for an individual to file a Form 1040. Like chapter 10, this chapter uses a numerical example to demonstrate how each of the alternative methods operates, which allows for easy comparison among alternatives. The chapter compiles the results of the example into one table for easy reference.

This chapter is a follow-up to the previous chapter, adding additional details and responding to anticipated objections that consumption tax detractors might make. Thus, the chapter discusses how e-Tax could work in situations involving payers who do not wish to be readily identified, cash transactions, policing payments of inherently personal expenses for which the payer might attempt to obtain a VAT credit for which he would not be eligible, systemic cheating and how it could be controlled under e-Tax, special treatment of transactions involving financial institutions, interaction of e-Tax with state taxation and other special circumstances, including used property, personal residences, barter transactions and the underground economy, and gifts.

This chapter tells the amazing story of how Orange County was able to recover from the largest municipal bankruptcy in U.S. history in only eighteen months. It analyzes the reasons for the defeat of the Measure R sales tax measure and looks at its political aftershocks. It reviews the consensus plan that emerged and the state legislation that enabled Orange County to pay its bills without raising taxes or benefiting from a state bailout. It then considers the ongoing story of the post-bankruptcy fiscal recovery. This story includes legal actions against county officials, lawsuits against the firms who did business with the county officials, and mounting costs as a result of the Orange County bankruptcy. It is a great irony that the fate of the state legislation for the Orange County recovery was dependent on Los Angeles County.

This chapter addresses another continuing controversy, the Internal Revenue Code’s restrictions on the political activity of churches. In this context also, there are contestable trade-offs among legitimate and competing values. Among the most important of these is minimizing church-state entanglement. To advance this value, this chapter proposes a statutory safe harbor protecting churches’ internal communications. While the first part of this chapter proposes to loosen an existing tax-related constraint on churches, the second part identifies an area where additional taxation of churches is sensible: Sales taxes should apply more broadly to churches’ purchases and sales since cash transactions carry less danger of church-state entanglement.

This chapter presents arguments for protecting American workers from a tax increase. To avoid a significant shift in the tax burden away from those at the top down the income scale, it proposes to retain tax on inherited wealth and an income tax on income over $100,000. The chapter suggests that the income tax be imposed at a low rate, in the range of 20 percent to 25 percent. The only reason to collect a consumption tax from individuals rather than from businesses is to allow exemptions or to impose progressive tax rates. The chapter also argues that the task of protecting low- and moderate-income families from a tax increase must take a different approach in consumption tax proposals, such as a common credit-method VAT or a retail sales tax, which would eliminate the requirement for individuals to file any tax returns.

Since the United States needs more revenue than it can generate just by raising existing taxes, policymakers need to think about new taxes, starting with a broad-based national consumption tax, as discussed in Chapter 13. Value-added taxes (VATs) are the world’s most common consumption tax, in place in more than 160 countries, including every economically advanced nation except the United States. A VAT is really a sales tax for consumers, but it’s collected in parts at each stage of production rather than all at once at the retail level. A broad-based, 10 percent value-added tax should be a central part of the fiscal solution. It would raise substantial revenues. It wouldn’t distort incentives to save, invest, or borrow. And it’s simpler to administer than other broad-based consumption taxes.

This chapter explores the gender biases embedded in facially neutral tax laws, focusing specifically on so-called “tampon taxes,” levies exacted on menstrual hygiene products. In most of the states in the United States, menstrual hygiene products are subject to sales tax. Meanwhile, in much of the European Union, these products are treated as luxuries and are subject to the highest rate of VAT. The various human rights affected by tampon taxes include the rights to be free from discrimination, to health, to education, to work, and to dignity. The chapter then considers potential venues and strategies for legal challenges in the European Union, the United States, and elsewhere. Strikingly, the European Court of Human Rights (ECtHR) precedents cited concerning gender discrimination all involve suits brought by men complaining of disparate treatment—much as some of the earliest cases recognizing gender discrimination in the United States were brought by men.

This chapter looks at the response to the fiscal emergency in Orange County. It shows how the county government reshaped itself to overcome its fragmentation and how scores of local governments managed to work together despite their local orientation. The public's reaction to the ongoing fiscal crisis is also of interest, since the fate of a tax increase for bankruptcy recovery would be in their hands. What also emerges is a new role for the state government. There would be no state loans or financial help, as was the case in New York. California was in no position to offer a bailout to Orange County. The county government needed someone to manage the Orange County Investment Pool. They called on the former state treasurer, Tom Hayes. Hayes was able to sell off the risky securities and transform the pool into a safe money-market fund in about a month. The Measure R sales tax was the centerpiece of the investment pool settlement and critical to the county's efforts to avoid a default on bond payments.

This chapter examines the changes in the effective tax rates on labor supply and on savings that would arise when the existing income tax is replaced with a specific consumption tax proposal. It describes a plan called FairTax, in which both the federal income tax system and the Social Security payroll tax are replaced with a flat rate national retail sales tax coupled with a universal rebate and a substantial reduction in government services. Using a sophisticated computer program, effective tax rates are calculated based on the assumption that individuals smooth consumption over their life cycles. The results suggest that the marginal effective tax rates on labor supply tend to be lower under the national retail sales tax than under the current income tax, while marginal effective tax rates on saving are highly positive under the income tax but fall to zero under the consumption tax.

This chapter examines the unraveling of the pro-growth, pro-debt coalition, which dominated city politics in the 1940s and 1950s. By the late 1960s, black and Asian San Franciscans revolted against the infrastructural inequality that had driven the city for so long. Concurrent with this revolt was a growing left-wing critique of municipal bonds as unfair vehicles for the upward redistribution of wealth. The chapter argues that although lawsuits, riots, uprisings, and populist critiques did not cohere into something we might call ‘resistance,’ taken together, the city saw a major revolt against the downstream effects of a debt arrangement that did many residents little good. But perhaps the most significant revolt was in the minds of bankers and credit rating analysts who interpreted these protests primarily in terms of the growing unreliability of the city.

After running Senator Cooper’s successful reelection campaign, Host was asked to do the same for Judge Marlow Cook in the Republican gubernatorial primary against Louie Nunn in 1967. Nunn won the primary and asked Host to help organize his campaign against Democrat Henry Ward. After he won the general election, Governor Nunn named Host commissioner of public information. Host helped secure votes for Nunn’s sales tax increase, promoted state tourism, helped secure funding for Kentucky Educational Television, developed plans for the Kentucky Horse Park, and organized the Republican Governors’ Conference in 1969. Host then became commissioner of state parks and worked to expand the park system and preserve historic homes such as the Mary Todd Lincoln House and White Hall (home of abolitionist Cassius Clay).

Chapter 3 explains how yoga won an American audience as marketers advertised health benefits and downplayed religious associations, while gesturing toward spirituality. Although many people perceive yoga as secular, religion and spirituality are pervasive in the contemporary yoga scene, including “Christian yoga” and yoga-based “health and wellness” programs in public universities and K-12 public schools. School-yoga advocates who defuse objections by subtracting religious-sounding language claim to have won a “Vedic Victory.” Some who argue that yoga is appropriate for public schools because it is secular also argue that yoga should be exempt from sales taxes because it is spiritual, and therefore protected as free exercise of religion by the First Amendment. Surveys—importantly Yoga in America studies commissioned in 2012 and 2016 by Yoga Journal and Yoga Alliance—suggest that many practitioners have spiritual experiences and that longer-term, more frequent practice correlates with spiritual motives. Yoga has attracted enthusiasts and provoked controversies worldwide, including in India, because it has religious and spiritual associations—and political and financial implications. Certain Christians and Muslims, among others, view compulsory participation as violating conscience. The chapter argues that yoga epitomizes the blurred boundaries between the secular and religious in American public life.

IN A WEALTHY NORTHEASTERN STATE, two schools are near each other geographically but far apart in every other way. The school in the city sits beside an abandoned lot in a community that has lost most of its industrial jobs. “The physical appearance of the school is bleak, depressing. The hall is dark and dingy. . . . The playground outside is all brown wood and it is completely surrounded by hard pavement.” The library has not been used for 13 years; even the faculty bathrooms have no toilet paper or soap. The gym leaks. There is one computer for every 35 students, and none of the classrooms is wired for the Internet. The principal has trouble attracting qualified teachers in many fields and has none trained in computer instruction; according to the scholar who looked at these schools, teachers mainly use the computers to keep the students busy playing games when they have completed their worksheets. In this school 98 percent of the students are non-Anglo, more than two-thirds are eligible for free or reduced-price school lunches, almost three in ten are in special education. The residents of the district have a per capita income of $17,000 a year. In the suburb nearby, the school is “housed in a modern building and surrounded by large, well-maintained athletic fields. [It] boasts such amenities as a spacious school library furnished with rows upon rows of book stacks, and a high-ceilinged auditorium with theater-style seating and a grand piano on stage. Not only does the school have computers in every classroom, it also has a fully equipped computer lab, staffed by an instructor.” There is one computer for every four students, all wired for Internet use. Teachers have aides as well as access to “resource teachers” who specialize in various academic fields, help with curricula, and give “guest lectures” in classrooms. Most students participate in the orchestra, chorus, or specialized bands (or perhaps all three). One fourth-grade teacher, a graduate of Vassar College, was chosen over more than 200 competitors for her job, and along with the others in the school is paid considerably more than the state average. In this school 95 percent of the students are Anglo, fewer than one percent are eligible for free or reduced-price lunches, and only 5 percent are in special education. Residents of the district have a per capita income of $70,000.