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In reply to the discussion: "Free Trade" is a SCAM. It always has been. [View all]pampango
(24,692 posts)60. The Swedish VAT raises the cost of a Swedish-made car by assessing incremental increases at each
step in the process. If Sweden had no VAT there would be no assessment of incremental taxes at each step of the process so the car would be cheaper when it was delivered to the dealer. A 20% VAT would raise the cost of that car by 20% in total as a result of incremental increases at each step of the process.
The net effect of this is that each supplier in the chain remits tax on the value added, and ultimately the tax is paid by the end consumer.
https://en.wikipedia.org/wiki/European_Union_value_added_tax#Domestic_supply
https://en.wikipedia.org/wiki/European_Union_value_added_tax#Domestic_supply
You are right that an imported car from Japan, let's say, is assessed all at once when it comes through customs.
The VAT raises the cost to the consumer of both imported and domestic products over what it would be if no VAT existed. That's the point of the VAT is to raise revenue for the government. If the VAT were an effective tariff, it would be considered as such under international trading rules which limit tariffs between countries. The fact that trading rules allow an unlimited VAT and limit tariffs shows that the two function very differently. The EU has the largest economy in the world. It is not like they are sneaking the VAT past the rest of the world without us noticing.
US imports are 12% of our economy. Imports are 30% of Sweden's economy. If excessive imports devastated an economy, Sweden's would be much more devastated than the US'.
Us exports are 9% of our economy. Exports are 32% of Sweden's economy. Our trade deficit is caused by our very low level of exports. Why is that? Wages are as high or higher in Sweden and their unions are much stronger and more pervasive than ours are.
Sweden seems to accept its role as a member of the global economy and has figured out how to succeed at it, while maintaining its strong middle class, effective safety net and widespread labor unions. Other progressive countries do the same. It cannot be that hard to figure out. I doubt that Swedes or Germans or Norwegians or Australian are any smarter than Americans.
OTOH, the US is fixated on what the world is doing to us and how we can punish foreigners for it. At least that is the Trump approach.
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Sweden trades more than twice as we do. Their unions are strong. Their wages are high.
pampango
Jun 2016
#2
How do they have positive trade balances without tariffs and with high wages and strong unions?
pampango
Jun 2016
#51
Also because wealthy corporations have gotten wealthy exporting jobs to other countries and then
Akamai
Jun 2016
#73
Yup/ Free Market Job Creation, Bedford Falls: 'It's a Wonderful Life' GOP Version.
appalachiablue
Jun 2016
#77
I'm sure you are right. They expect more from their government and "are more than willing
pampango
Jun 2016
#50
VAT applies to both imports and domestic products. Tariffs only apply to imports.
pampango
Jun 2016
#49
So applying a VAT (say 20%) to both imports and domestic products levels the playing field?
pampango
Jun 2016
#58
The Swedish VAT raises the cost of a Swedish-made car by assessing incremental increases at each
pampango
Jun 2016
#60
Just because Trump stopped thinking doesn't mean Democrats should. No automatic positions, pls. . nt
Bernardo de La Paz
Jun 2016
#10
And the latest ones are mainly about proving more power and leverage to big corporations
n2doc
Jun 2016
#15
Yep. The US would be a better place if all 50 states could impose tariffs on trade with each other.
Nye Bevan
Jun 2016
#56
There's no such thing as free trade. Some people lose big time ... WORKERS
Zen Democrat
Jun 2016
#74