Who bears the burden of a tax is different than who pays for it legally. (The actual effect of a 20% total payroll tax shouldn’t change depending on how you allocate it between employer and employee.) That is because employers can simply decrease wages to cover the tax. Payroll taxes are primarily borne by employees: https://taxfoundation.org/what-are-payroll-taxes-and-who-pay....
Another important point is that these social insurance contributions are deliberately regressive. In the US, the Medicare payroll tax is paid on all income, and Social Security is paid on the first $130,000. There is a big push in the US to eliminate the Social Security cap. In Germany, by contrast the pension contribution is only paid on income below about $70,000, and workers making more than that are exempt from the public insurance system. (So someone making $10,000,000 per year pays almost nothing in social insurance taxes.)
Likewise, VAT is primarily borne by consumers, and consumer-facing small businesses. Even though the business pays it, some of the tax is passed onto consumers through highs prices. Who bears the VAT depends on relative elasticity of supply and demand. In highly competitive industries like restaurants, the owners and workers can bear most of the VAT. But large corporations m in high margin businesses have the pricing power to pass on most of the VAT to consumers. (E.g. an iPhone is 25% more in Germany than the US, more than enough to completely cover the VAT.) VAT is not paid on investment income, nor on banking services. So the wealthy, who invest most of their money rather than spending it on consumption, pay little (as a percentage of income) on VAT.
Combined with low corporate taxes, the end result is rather right-wing. American Republicans would prefer to have a low overall tax burden because it boosts the economy. But if we had to raise taxes to say 35% of GDP, they would much prefer to have the European system, where the middle class bears most of that burden, than scaling up the US system, which would cause businesses and the rich to bear most of the burden. Notably, the only serious proposals for a VAT in the US has come from conservatives like Ted Cruz, Herman Cain, Saxby Chambliss, etc.
Another important point is that these social insurance contributions are deliberately regressive. In the US, the Medicare payroll tax is paid on all income, and Social Security is paid on the first $130,000. There is a big push in the US to eliminate the Social Security cap. In Germany, by contrast the pension contribution is only paid on income below about $70,000, and workers making more than that are exempt from the public insurance system. (So someone making $10,000,000 per year pays almost nothing in social insurance taxes.)
Likewise, VAT is primarily borne by consumers, and consumer-facing small businesses. Even though the business pays it, some of the tax is passed onto consumers through highs prices. Who bears the VAT depends on relative elasticity of supply and demand. In highly competitive industries like restaurants, the owners and workers can bear most of the VAT. But large corporations m in high margin businesses have the pricing power to pass on most of the VAT to consumers. (E.g. an iPhone is 25% more in Germany than the US, more than enough to completely cover the VAT.) VAT is not paid on investment income, nor on banking services. So the wealthy, who invest most of their money rather than spending it on consumption, pay little (as a percentage of income) on VAT.
Combined with low corporate taxes, the end result is rather right-wing. American Republicans would prefer to have a low overall tax burden because it boosts the economy. But if we had to raise taxes to say 35% of GDP, they would much prefer to have the European system, where the middle class bears most of that burden, than scaling up the US system, which would cause businesses and the rich to bear most of the burden. Notably, the only serious proposals for a VAT in the US has come from conservatives like Ted Cruz, Herman Cain, Saxby Chambliss, etc.