You have selected option "3" to read summary of a Value Added Tax proposal.
SUMMARY:
The value added tax is similar to the national sales tax, however, instead of implementing one tax of a certain percentage at the time of retail sale, there is a smaller tax, proposed at 5%, added each time the product is resold or when value has been added. For example a tax is added when a product is passed from a manufacturer to a wholesaler, and again from the wholesaler to the retailer. Most products would be priced higher than they are today because the cost of goods would include this built in tax. The Value added tax proposal is sponsored by Representative Sam Gibbons of Florida and Senator Ernest Hollings of South Carolina.
Disadvantages:
- A 5% tax is levied at each stage of production of goods.
- The total tax is built into the cost of goods
- Exports are not taxed.
- All imports are taxed.
- It allows multiple rates and exemptions on goods from other countries.
- This form of tax is used by many other industrialized countries currently.
- No tax forms or tax returns will be needed for individuals.
- It would eliminate the need for the IRS.
- The cost of compliance is estimated at nearly $5 billion per year, about a hundred times less than the current system.
- It would be similar to the National Sales tax, but it would be more complicated to administer and collect.
- It would also tax food and medicine as does the national sales tax.