Quote:
Originally Posted by Villages Kahuna
Actually, Richie, a sales tax puts more money into the government's pockets and results in much higher prices to consumers than a VAT tax. In that sense, I hope you're wrong and that Cain's plan really is a VAT tax.
Let's take a really simple example. A fabricator buys steel from a steel mill, fabricates a product, and sells it to a consumer. Let's assume that each company in the supply chain marks up his costs by double to create a selling price for his product.
VAT Tax Example - Steel company buys taconite from mining company for $1,000 (that includes $90 in VAT tax buried in the selling price)
- Steel mill produces and rolls steel and sells it to the fabricator for $2,000 (that includes $180 in VAT tax included in the selling price of the steel)
- The fabricator produces a product and sells it to a consumer for $4,000 (that includes $360 in VAT tax)
- Total VAT tax paid to provide the product to the end-user is $630.
Sales Tax Example - Mine sells taconite to steel company for $1,000. Steel company has to pay $1,090 including a 9% sales tax of $90
- The steel company produces and rolls steel and sells it to the fabricator for $2,180. The fabricator has to pay 9% sales tax on the purchase steel, a total of $2,376
- The fabricator sells his product, made with the steel, to a consumer for $4,752. The consumer has to pay a 9% sales tax of $428, bringing his purchase price to $5,180
- Total "sales taxes" collected in the process of producing and selling this product to an end-user = $714
Many have described the plan Cain sets forth as a VAT tax. If it is actually a sales tax as you assert, the total taxes paid to the government would be $714, about 13% more than if the tax regime was a VAT tax. More importantly, the consumer would have paid a purchase price of $5,180 instead of $4,000 under the VAT tax regime, almost a 30% premium in purchase price. |
I'm not wrong as far as I can clearly read Cain's own words on his own website. It's is a sales tax and not a VAT. Maybe if you read his own words it's might help to understand his reasonings of the revenue raised and the costs saved by his plan which combines the FLAT TAX with the FAIR TAX.
You do know that the corporations in your example have lower costs and increased revenue due to the new 9% Corporate Tax Rate. Their products most likely will still be cheaper.
You know, also, that all American's will have the option to buy or not buy these products, with the resulting effect of Americans being control of their own Federal Tax Bill.
This simplified Tax Code eliminates the vast bulk of the $430 Billion Dollars it cost to collect taxes under the present system. Quite a savings for the Government, isn't it?
I know I'm only a retired truck driver and not a financial services guy, but I think everyone needs to dig a little deeper and explore all the angles a little better.
Maybe this can eliminate everyone's speculation if you've got his plan,in his words, in front of you.
http://www.hermancain.com/999plan
P.S. to my good friend Buggy. What's the difference what your predictions are. They are irrelevant to the conversation here. How about starting another thread where all of your people and you can pat each other on the back and laud Obama and bask in the gloriousness of his presidency. I promise, I'll leave you alone on that thread. Or we can have a big discussion over an adult beverage if you want; or I can just listen to you pontificate on Obama's greatness and I'll just roll my eyes. Whatever you want.
http://www.hermancain.com/999plan