A decrease in personal income tax. Which disadvantage of the value-added tax (VAT) is most likely to be cited by people with low incomes?
As a consumption tax, everyone pays the same amount, regardless of ability to pay.
How does a flat tax differ from a value-added tax VAT?
A flat tax and a value-added tax are two common tax systems used in industrialized countries. A flat tax is simply a single percentage rate applied to everyone’s income, while
a VAT is charged by item or service
.
Which is an argument against implementing a Value-Added Tax VAT )?
It would expect a decrease in demand. Which is an argument against implementing a value-added tax (VAT)? It
places an unfair burden on people with lower incomes. It places an unfair burden on large corporations.
What is the purpose of the balanced budget amendment enacted by these states?
WHAT IS A BALANCED BUDGET AMENDMENT? In its simplest form, a balanced budget amendment would
add a budget rule to the Constitution that would require federal spending not to exceed federal receipts
. The amendment would make it unconstitutional for the federal government to run annual budget deficits.
How can the national debt impact private businesses ?( Select all that apply?
The
national debt causes deflation and decreases interest rates for private borrowers
. The national debt causes a crowding-out effect and increases interest rates for private borrowers. The national debt requires the government to increase revenue streams and potentially increase taxes.
Is VAT a direct tax?
The UK has many taxes. Some are known as
‘direct’ taxes if they are levied on the income or profits of the person who pays it
, rather than on goods and services. … The most well-known example of an indirect tax is value added tax (VAT).
Is there a difference between tax and VAT?
You can think of VAT as a type of Goods and Services Tax or GST as a type of Value Added Tax, but they essentially mean the same thing.
Who pays VAT seller or buyer?
The seller charges VAT to the buyer
, and the seller pays this VAT to the government. If, however, the purchasers are not the end users, but the goods or services purchased are costs to their business, the tax they have paid for such purchases can be deducted from the tax they charge to their customers.
Why Value added tax is bad?
Because lower-income households spend a greater share of their income on consumption than higher-income households do, the burden of a VAT is
regressive when measured as a share of current income
: the tax burden as a share of income is highest for low-income households and falls sharply as household income rises.
Who gets VAT money?
VAT is an indirect tax because the tax is paid to
the government by the seller (the business)
rather than the person who ultimately bears the economic burden of the tax (the consumer).
What are the advantages of a balanced budget?
As noted above, the main advantage to a balanced budget is that
you avoid incurring debt to pay your bills
. As an individual, not having a balanced budget means spending more than you take in. But the catch is that the money has to come from somewhere.
Who would enforce a balanced budget amendment?
This extra spending goes to businesses, which can avoid layoffs as consumers start spending less. The judiciary would likely become an integral part of the budget process. If Congress ignores the amendment, it would be up to
the courts
to enforce it, markedly increasing the courts’ role in the budget process.
Why can’t states run deficits?
State and local governments do not have the economic ability to run fiscal
deficits to encourage aggregate demand like the federal government
. With this macroeconomic handicap, many state and local economies ask for federal aid during times of hardship.
What are five ways the national debt can affect the economy?
- Reduced Public Investment. …
- Reduced Private Investment. …
- Fewer Economic Opportunities for Americans. …
- Greater Risk of a Fiscal Crisis. …
- Challenges to National Security. …
- Imperiling the Safety Net.
Can national debt be written off?
Most creditors are able to consider writing off their debt
when they are convinced that your situation
means that pursuing the debt is unlikely to be successful, especially if the amount is small.
How do we reduce the national debt and still stimulate business growth?
The only way to reduce the debt is
to either raise taxes or cut spending
. Either of those can slow economic growth. They are two of the tools of contractionary fiscal policy.
