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Trump and Musk’s DOGE purge sees 6,700 IRS staff fired

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What we’ve got here is pie in the sky economics slathered with confused terminology. It jumbles‍ together tax systems that have zero business being in the same conversation, skips over real⁠ world policymaking entirely, and all together misunderstands how VAT functions.
If this garbage became policy⁤ it would gut state budget, turbocharge wealth inequality, and basically hand out engraved invitations to⁣ dodge taxes.
 
I was picking up on the latest Trump ideas of 25% duties combined with no⁠ personal income tax below $150k and his corporate tax cut from his first term.

The rough idea is to replace the personal income tax (below $150k) with a VAT. With⁤ a 25% VAT as an example, if $1250 are spent for the purchase of an⁣ item in a shop, $250 go the government in form of VAT. (As most salary⁢ below $150k is spent, that is basically a replacement of the current income tax.)

As we all know, Trump already lowered corporate taxes during his first term and is contantly︀ playing with import duties, upsetting trade parties. Hence the second rough idea. With the VAT︁ in place, goods/services sold domestically would be subject to VAT when sold. Looking at the︂ value chain of a $500 item being imported to the US and then sold for︃ $1000+$250 VAT, it can split into the import cost of $500 and $500 of domestic︄ work performed and profit (noting that profit can occur in both domestic and foreign companies).︅ By lowering pesonal / corporate taxes, the VAT effect on domestic work and profit is︆ basically negated, roughly leaving a new duty of 25% (and as a nice side-effect a︇ 25% tax on the profits of foreign companies selling in the US).

Again, there are︈ numerous side-effects to be addressed. But I am trying to bring attention to the missing︉ VAT in the US (state sales taxes aside), which for example makes it very attractive︊ for foreign companies to sell import goods and services there without paying any tax, while︋ the EU gets a good junk of VAT from Chinese sellers selling on Amazon.
 
So you cannot answer the below question which I asked you︌ above? Just say so and we can leave it alone. I mean if you propose︍ something at least have some rough maths in mind as to how it could economically︎ work in real world.
 
I don't have exact numbers,‍ but my rough estimate would be that a 25% VAT, retail sales would be in⁠ the order of the current individual income taxes, 2.4T USD.

2024 individual income taxes were⁤ 2.4T. Walmart made 532B at at retail market share of 9.51%, giving an⁣ estimate 5.6T retail sales. Accouting for probably numerous exemptions, if 20% can be collected, it⁢ would be 1.1T.

Taking into account all non-retail transactions with end consumers, my assumption is︀ that the total VAT collected would exceed the total amount of individual income taxes. The︁ data for Germany at 19% VAT and comparable income taxes are here:
https://www-genesis.destatis.de/datenbank/online/table/71211-0001/table-toolbar
 
When US total retail sales in 2023︁ was $7.22T and lets says $5.6T figure you gave for 2024. How does $1.1T help︂ the US...lol? And why 20% instead of 25%?

US Federal spending alone in 2024 was︃ $6.8T. Total revenue in 2024 was $4.9T leading to a $1.8T fiscal deficit for US.︄ See below and inform yourself on the fiscal reality US is in.

https://www.cbo.gov/publication/61181

You would︅ have needed to get $4.5T in revenue in 2024 from your so called non-retail transactions︆ to balance the books, or cut $4.5T in spending with the damage that would do,︇ or issue more bonds to a shrinking pool of US treasury buyers.
 
As explained above, I took 20% instead of 25%⁠ to account for the numerous exemptions (carrots, medicine) that will follow.

The first National Debt Clock dates back to 1989. I do not see any way to⁤ fix the debt problem, especially with current Social Security spending which will increase over the⁣ next decades. I am not talking about how to fix it as I consider it⁢ unfixable.

I was just pointing out that the idea of abolishing personal income tax below︀ a certain threshold is not that stupid if a VAT would be introduced. And I︁ pointed out that among other side-effects, it would generate revenue from foreign contributors which currently︂ benefit from the US market.
 
Thank you. But⁢ I am just making clear that a VAT solution is not based on any logical︀ or fiscal reality. Don't get sucked into Trumps alternative reality.
 
nowadays EINs get assigned faster for non us residents. January-february 2025 it was a nightmare,‌ 1-2 months wait time. Previously it was around 3 weeks. Now its 1-2 weeks. So‍ seems like Trump or Musk are getting something done to fix IRS. ALso they are⁠ sending fax confirmations now which arrive just after a few days, usually they would never⁤ send fax
 
USA already has sales tax besides other taxes when you buy︌ items from stores or online now. He is only looking out for rich corporations and︍ rich individuals. Poor people are getting crushed. China is not negotiating either. They have bigger︎ markets.
 
Really? Trumps says he is‌ speaking to Chinese president after Xi called him....lol 😉.

China has nothing to negotiate. Exports‍ to US account for only around 15% of China's total exports and that 15% of⁠ trade accounts only for less then 3% of China's GDP. In plain English the US⁤ is nothing to them but a rounding error. They diversified their trade after Trumps first⁣ term. On the other hand US economy and manufacturing is heavily reliant on Chinese goods⁢ and components...especially small and medium businesses. He has already had to make some exceptions to︀ tariffs on China unilaterally and will have to do more down the line.

If I︁ was China I would just ignore him until he removes all tariffs unilaterally or he︂ does "a pause in tariffs on China while [imaginary] negotiations go on". I mean whatever︃ saves him face😉
 
Are you sure China is so strong?






Their apparent strength coincided with basically every 3rd tiktok︃ video being some "influencer" talking up how good the place is, and an influx of︄ travel bloggers visiting their. Big red flag.
 
China has⁠ mountains of gold in their storage. Russia and China both took advantage of peace in⁤ the world during last few decdes and started buying gold while USA was loosing money⁣ in terror wars (no choice of its own ). China has 85 percent of world's⁢ market now. 15 percent USA doesn't matter to them. I am sure it will do︀ negotiations with USA soon. Countries don't run on emotions alone.
 
Yes.

One third‌ of global manufacturing on the planet is done in China, $3 trillion in forex reserves,‍ biggest auto market in world and also biggest car producer, biggest middle class in world,⁠ the highest number of patent applications in world, the highest number of scientific and technology⁤ research papers in world, major trading partner to over 120 countries etc etc. China is⁣ a behemoth of an economy with advanced infrastructure and diverifised trading relationships. It is a⁢ biggest market in world for luxury goods also and they have not even transformed into︀ a consumption based economy yet and are still export driven....think about that. Look it all︁ up.

The clear fact is that China is by far the biggest economy on the︂ plant...FACT. Way bigger than US when a true measure of GDP is used. Even the︃ US recognizes this but no one wants to address the elephant in the room.

In 2023 China's GDP measured in PPP (real measure of GDP) was $31trn and US $25trn.︄

https://www.cia.gov/the-world-factbook/field/real-gdp-purchasing-power-parity/country-comparison/

The US having the reserve currency has allowed them to live beyond their means︅ without blood, sweat of tears to achieve prosperity. By 2030 China will be biggest and︆ most advanced semi conductor manufacturer. They will have their own chip foundries and lithography machines︇ etc. I can even go on about the military side if you want to know︈ about China's military strength compared to US.

Bottom line is US is not critically important︉ to China and China is not afraid of US, economically, politically or militarily. Trump may︊ not be around in 4 years but China's one party system will be....lol. The Chinese︋ can wait this trade war out and made clear they willl fight to the end︌ but can America do the same....lol?

P.S Some will get triggered by reality of China︍ but its not my place to worry about that sadly. Anyway we have gone WAY︎ off topic...lol
 
Yup Americans went over there and built factories, shared knowledge and hollowed out their own industries‌ back home to make a quick buck. Now they want to blame China for the‍ state America is in rather then themselves and business leaders....lol. It was indeed pure US⁠ corporate greed that has come home to roost. Now Trump wants to reverse that. He⁤ does not get it. Companies like Apple would rather build factories in the poorest African⁣ country before they would ever choose America as the high cost would make them internationally⁢ uncompetitive in the global export market. And this pretty much goes for most US companies︀ who build outside high cost America....lol.

On topic, DOGE has achieved very little it seems︁ in the scope of things. The US economy has contracted (-0.3%) in first quarter of︂ 2025 and by the sounds of things firing IRS officers may not have been a︃ good idea after all. Things may get so bad the Mexican Cartels may move to︄ smuggling children's toys, footwear and generic legal pharmaceuticals from China in Trumps high tariff America︅ smi(&%.

"Hey Amigo I got a Barbie doll for sale you interested?" ca#"!
 
Lol I have already seen original barbie dolls for 5 bucks︇ each. I picked up 30 of them for my little girl. I know I was︈ buying it for 35 usd earlier for my nieces.
 
Yeah im in imports from China and some electronics they manufacture in Shenzhen mostly is‌ very high quality while the price is very competitive. Many respected western brands manufacture their‍ stuff in China and put on a fancy branding and design and sell it with⁠ 1000% markup. Times when made in china means poor quality are gone long time ago.⁤ Overall its difficult to get good information in China, loads of propaganda funded my americans⁣ or chinese out there.
Also the tarrif thing, it can be bypassed in many ways,⁢ similar to alcohol ban in 1920. Under declare goods value, smuggle, move factories outside of︀ China. One of my supplier is already moving one of its factories to Thailand. There︁ are logistics companies specialized in bypassing tarrifs. Its difficult to ban international trade nowadays.
With that said I prefer to distance myself from political or geopolitical drama and do business︂ instead, I am capitalist not a politician, cant be bothered
 
Ahh yes you just made me remember. The last time I was looking‍ to order stuff on alibaba the seller asked me what price I wanted writtten on⁠ the invoice 😳. He said he could label the body products "Samples" and put the⁤ value at $1 if I wanted. I bailed on seller as customs where I am⁣ dont play. So I am sure smuggling will occur especially during desperate times. This is⁢ why they would need more IRS agents as smuggling and fraud may get out of︀ control.
 
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