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.
I meant that the 9 percent tax is included in the cost so that the manufacturer or whatever is not really paying the tax. The price to the next guy is then 9 percent higher before the 9 percent tax is even considered. Then the profit of the first guy is taxed 9 percent, but it is already on a falsely inflated price.
Then the next guy does the same thing.
Several other people have said this too. We all know increases are passed on to the consumer in a covert way. This principle would operate all along the chain, and would be compounded, with each hidden 9 percent being added to the cost of the next guy.
It’s something like rent control’s hidden cost to the tenant: Every two years you pay an increase in your rent, based on the previous rent, which includes all the other increases. It’s like compound interest on a savings account but in reverse.
The retail consumer gets scrooed the worst.
Another thing I wanted to say about 999: When Cain says it would only apply to used items, I have to laugh. What low-income person ever buys anything used? A used cellphone? A used TV? Used Nikes? They always want the newest and best, which I think is not a bad thing, unless they are cheating in some way to be able to afford these items.
He’s thinking of our parents and grandparents, who made do with secondhand stuff while they worked hard and socked away as much as they could to improve their lives and those of their children.
At one juncture when I signed a new cellphone contract, the store offered me a better phone than the one that came with the contract. I asked why he would do this. He said, “It’s a used phone. The kids are all upgrading to camera phones.”