Quote Originally Posted by sparq View Post
There is one significant difference between a VAT and sales tax if I get it right. VAT is only collected from the final consumer of goods or services, sales tax is paid by every link in the service chain and results in higher overall taxation than VAT if the tax rates are equal.

Example: if I produce "A" and need part "B" from a provider "C"; the VAT is collected only from my customer (which depends on how much I charge for "A" alone). I do not pay VAT for purchasing "B" as I am not its final consumer.

Sales tax would be collected twice; the first time from me (I pay sales tax for purchasing "B" from "C") AND from my customer when he buys "A" from me; so the customer is effectively taxed twice for "B".

That's my guess, someone correct me if I have it wrong.



That's what progressive taxation is here for. Uncle Sam puts you in your federal tax bracket according to your gross adjusted income. The higher your income his, the higher your tax rate is.
I cannot speak for any other state, but as a former owner of a small business in Texas, I only paid sales tax on items that I was the final user. Cash register tape, pens, pencils, paper, etc. Everything for resale, or even as a part of something put together for resale was totally tax-exempt when I purchased it. Then I collected Sales Tax on the sale to the final retail comsumer.

The progressive taxation is what I am speaking against as totally unfair. Why should someone be penalized for earning more money? Why should someone be rewarded ( through deductions and credits ) for having more children?