Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comKey Contacts
Back
With the November midterm elections approaching in the U.S. and corporate tax reform heavy on the public’s mind, a number of radical solutions have emerged. One such system is the value added tax, or VAT, proposed by former Treasury official and professor at Columbia Law School Michael Graetz, as reported on by Delaware Online.
How it works
A VAT functions very similarly to a consumption tax, with the one exception that it is applied every time value is added. This means that under a 10 percent VAT, a dairy farmer who sells a liter of milk for $1 is charged 10 cents. A cheese plant that turns around and sells that liter of milk as cheese for $3 would be charged 20 cents – 10 percent of the $2 in added value. This process goes on indefinitely until the product is sold to an end consumer.
Benefits
There are two key benefits that make a VAT potentially very attractive in the current environment. The first is that consumption is massive – far larger than any other taxable base. Even a tiny increase in a consumption tax or VAT can produce massive revenue gains for the federal government. The second is that a VAT is designed in such a way that it is virtually impossible to evade. While a business can shift its corporate headquarters abroad or transfer paper assets to a foreign subsidiary, there are few – if any – recourses to paying a VAT.
Detractors
Opponents of a VAT argue that this system is necessarily regressive. While consumption taxation is flat in that everyone buying the same object is paying the same tax, the poor have to devote a higher share of income to consumption than the rich. Graetz’s system attempts to solve this problem by eliminating income tax on households making less than $100,000 per year, but other systems like basic income, negative income taxation and a system of vouchers have also been proposed.
As a business owner and want to further discuss how VAT may affect you contact any one of the attorneys who are members of the Tax, Trust & Estate practice group at Scarinci Hollenbeck for further information.
- Practices: Sophisticated Estate Planning & Wealth Preservation, Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Navigating Director and Officer Liability in Times of Financial Distress
Director and officer liability increases sharply when a company is in financial distress. Decisions that would draw little attention in a healthy business can later be challenged by creditors, shareholders, bankruptcy trustees, and regulators as breaches of fiduciary duty, fraudulent transfers, or oversight failures. Understanding where that exposure comes from, and how to manage it, […]
Author: Michael Mietlicki
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
Author: Nicholas Wall
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Author: Michael Mietlicki
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Author: Graham Staton
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Author: Michael Mietlicki
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Author: Sean M. Pena
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.