Quote:
Originally Posted by Cheiro
A similar system as this is used in Europe. Unlike here in the US where a tax (sales and/or user) is added at point of ultimate consumer purchase, a tax is added as a good is created/manufactured, at each step along the way. From the processing of raw material, to each process as something is made a tax is added. The result is that taxes are rather "hidden" in the cost of the ultimate purchase price. Taxes of this kind are really "regressive" and hit those of low income much harder than those who are wealthy. This is why states controlled by the wealthy have sales taxes rather than income taxes. The income tax was designed to spread the burden of taxation more fairly, the more you make, the more you pay.
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20% VAT is paid by consumer on purchasing product.
Tax does not get lost anywhere.