[Vigilanteman]

No, VAT, isn’t like a Tarrif. It is much easier to understand if you think about it as a sales tax imposed at every step of production which adds value to the work in process. Thus, the name.

[rb22982]

Actually, it works identically to a tariff vs Europe. If Europe exports the product to the US, they are refunded all the VAT, while the US production is taxed at 20% VAT (even though the value add was in the US) on top of the tariff.

For example, lets say the cost, including corporate income taxes and VAT taxes, to build a new car is $10,000 in the US and $10,000 in Germany (including $2k in VAT tax in Germany and $2k in income/other taxes in the US). In theory, there is no advantage, so US should focus on certain cars and Germany on others and can free trade at all. With the current VAT system though, Germany can export their car to the US for only $8,000 cost (because they get the $2k in VAT refunded) while the US car in Germany cost $12,000 ($2k in VAT added). This puts US car manufacturers at a significant disadvantage when it comes to imports/exports.

[kabar]

The VAT is passed on to the buyer. I paid up to 29% on some items I purchased in Europe.

[lewislynn]

a sales tax imposed at every step of production which adds value

Unfortunately you don't see how stupid that statement is.

Another example of how the left brainwashes idiots by bastardizing the language.