*** Value Added Tax, (i.e. VAT); a sales tax method.

Unlike any other sales tax method, VAT does not any manner increase prices by additionally taxing the sales taxes levied within previous sales transactions. For this reason the government’s revenues due to exactly the same rate of taxation is less for VAT and greater for all other sales tax methods.

After the first transaction of a transaction chain, given the same tax rate, the same number of prior commercial transactions, and the same prices for each transaction (excluding the transaction taxes), the total government revenue is less for VAT and greater for any other sales tax methods. That is due to commercial entities providing the similar paper work (as for conventional sales tax methods) but they subtract the VAT they paid from the VAT they collected and pass only the difference onto the government.

This business friendly method is particularly beneficial to small businesses because cash flow is among their major problems. Consumers pay no hidden and imbedded taxes upon sales taxes imbedded within each prior transaction link within a chain of transactions.

*** VAT or other sales taxes applied within the USA.

All governments try to waive their taxes within the prices of goods they export. U.S. states now using conventional sales taxes are unable to recognize itemized sales taxes from all but a last link in the chain of transactions within their states.

Generally states are unable to attribute any taxes levied upon businesses to any particular sale of goods or services.

Sales taxes are levied on purchasers and are collected by the sellers authorized to collect the tax on the state’s behalf. The sales taxes of goods or services delivered to out-of-state purchasers are generally recognized and waived by the exporting state.

There is no reasonable way for a the government or the purchaser to determine how much sales taxes levied in prior links of an intrastate chain of transactions are imbedded within the pre-tax price of any individual transaction.

The stated pre-taxed prices of goods within any transaction include all taxes upon commercial enterprises paid thus far and all conventional sales taxes collected within prior links of each intrastate chains of transactions.

The sales tax of the last link are generally waived if the goods or services are delivered to a purchaser beyond the state's jurisdiction. States can with the U.S.Congresse's aproval enter into mutual agreement with regard to sales taxes for interstate transactions.

Because states can not determine what sales taxes they received for prior tranxsaction links within a chain of transactions, they collect additional sales taxes upon the taxes that were previously paid.

This why states revenues due to conventional sales taxes produce greater revenue (for any specific state tax rate). Politicians are not endeared by VAT where the itemized sales tax you pay is absolutely the entire sales tax that you paid. They’re more comfortable with the concept that you pay the itemized tax of your purchase and guess how much of the pre-taxed price of the goods or services are due to sales taxes collected from prior links within each intrastate chain of transactions. The down side is for any specific rate of sales tax, the VAT will produce less total government revenue than a conventional sales tax. Within a VAT system to harvest the same total government revenue you must inform the purchasers of ALL of the sales tax they actually paid.

Sales taxes are levied upon the purchasers. U.S. states utilizing conventional sales taxes recognize and waive the itemized taxes for goods sold to out-of-state purchasers. They can only recognize and waive the sales tax for the last transaction link of a chain of transactions within their own states. The Out of state purchaser pays the increased cost due to the unidentified taxes within all prior links of the transaction chain within the exporting state. Taxes levied upon business entities cannot generally be attributed to any particular sale of goods or services. Generally all of these taxes such as corporate taxes are hidden within all links of transaction chains. [That’s why to the greatest extent feasible, I’m a proponent of shifting our revenue sources from income taxes to a sales tax (and I much prefer that sales tax should employ the VAT method).

In both VAT or other sales tax methods, to the extent that we shifted taxes levied upon businesses to a sales tax, Those shifted federal taxes would not be reflected in the net prices of USA goods sold within or beyond our borders; (i.e. all taxes levied upon businesses are eventually paid by purchasers). To that extent all taxes upon businesses actually act as a sales tax of various rates, we are already paying some amount of sales tax but we do not reap the benefits of taxes based upon consumption.



*** VAT or other sales taxes applied beyond USA’ borders.

All governments try to waive their taxes within the prices of goods they export. U.S. states now using conventional sales taxes are unable to recognize itemized sales taxes from all but a last link in the chain of transactions within their states. All of those intermediate transaction link's conventional state sales taxes are unrecognized and thus cannot be waived.

Generally governments are unable to attribute taxes levied upon businesses to any particular sale of goods or services. (Sales taxes are levied upon purchasers). The taxes are collected by seller’s who are authorized to collect the tax on the government's behalf.

To the extent that we would shift any portion of our federal income tax revenues to federal sales tax revenues we could waive that sales tax for goods delivered to foreign purchasers. Note current prices to foreign purchasers now include all taxes levied upon businesses (which includes corporate income taxes and employers’ shares of the FICA payroll tax). To the extent that federal tax was a VAT rather than a conventional sales tax, rather than waiving only the itemized sales tax within the sale transaction of USA goods delivered to foreign purchasers, there would be no additional federal sales tax within the stated price of those USA goods.

In both VAT or other sales tax methods, to the extent that we shifted taxes levied upon businesses to a sales tax, Those shifted federal taxes would not be reflected in the prices of USA goods sold within or beyond our borders; (i.e. all taxes levied upon businesses are eventually paid by purchasers). To that extent all taxes upon businesses actually act as a sales tax of various rates, we are already paying some amount of sales tax but we do not reap the benefits of taxes based upon consumption.

To significantly reduce USA’s trade deficit, increase the aggregate sum of USA’s imports plus exports and induce a greater median wage, refer to the discussion:
“Reduce the trade deficit; increase GDP & median wage”
posted on September 1, 20010, 12:14 PM.

Respectfully Supposn