Comment by presto8
12 days ago
Because VAT is collected at the border on imports, some people (wrongly) consider VATs a tariff. Considering that VAT is rebated on exports, VATs are trade neutral.
Sales tax as implemented in the US is not as tax efficient as VAT due to the impact of sales taxation on intermediate transactions during manufacturing. VAT only taxes the incrementally the value added at each transaction) whereas sales tax applies to the entire value at each stage.
Hmm how is it different in the US do you not get back in the sales tax that you paid for your input. Here the middle man pay tax on the buying price and then collects on the sell price. Then has to pay the government minus what they paid as input sale tax. So all increments on the price gets taxed till the end user. But the tax itself is not taxed again.
Im fairly certain VAT is collected at point of sale in the EU.
Does the US charge sales tax on B2B transactions? Really? Well no wonder you have problems with domestic manufacturing.
Many B2B transactions are tax-exempt but it's complicated. And gets really complicated once international transactions are considered. And also whether the company has a physical nexus in the place the product is being purchased. All in all, I think it would be simpler if the US adopted VAT. But that seems very unlikely.
Unlikely, given that the current administration seems incapable of understanding what VAT is in the first place…
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There's no federal sales tax so it varies by state.