Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comThe Firm
201-896-4100 info@sh-law.comWith 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.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!