Except, as I mentioned later, companies tend to incorporate increased expenses into the cost to the next guy in the chain.
Of course, or else there'd be no profit. But as I understand it, Herman's plan allows the next company in the chain to deduct the purchase price from the tax, thus effectively taxing only the markup to the next company in the chain. If true, this would amount to a single tax for the finished item, not a multiple or "value-added" tax.