Tuesday, December 15, 2020

Carousel Scams

Why share an article about a complicated EU illegal money making scheme?

Two reasons. The first because it's an example of how organized criminals can exploit international borders. Related to this, it hints at the scale and complexity of such organizations, and how problematic it can be if they capture the judiciary. (Given what just happened politically in the states, that's something that really struck.)

Second. It's an interesting unintended consequences of the Value Added Tax. I vaguely recall European countries get more of 5heir funding through sales taxes? I think I remember some paperwork to use if I wanted to avoid paying the VAT. Anyways, the US is a hodgepodge of tax systems, so there are sales taxes... But the federal government uses income tax. I've heard a few people argue that shifting to something like a VAT would be better (though since it taxes consumption and part of our current problem is essentially hoarding by ultra rich people who only use a fraction of their wealth on purchases, hence why giving the average American a tax return - which they almost immediately spend - stimulates the economy more. In other words, a tax scheme that discourages consumption is probably not the best idea in our current set of circumstances).

In the unlikely event our tax code changed, this would be the kind of abuse we'd need to look for. 

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