Well, let’s see . . .
9% VAT:
Sale 1:
Raw materials: $60
Cost of labor: $20
Sales Price of good or service: $100
Real Income: $20
Taxable Sales Price: $40
Added Tax: $3.60
Sale 2:
Cost of materials: $103.60
Labor to sell: $20
Sales Price of Good or Service: $143.60
Taxable Sales Price: $40
Added Tax: $3.60
Total Tax: $7.20
9% Business Tax via Mr. Cain:
Sale 1:
Raw materials: $60
Cost of labor: $20
Sales Price of good or service: $100
Real Income: $20
Taxable Income: $40
Added Tax: $3.60
Sale 2:
Cost of materials: $100.00
Labor to sell: $20
Sales Price of Good or Service: $140.00
Taxable Sales Price: $40.00
Added Tax: $3.92
Total Tax: $7.20
Notice that the 9% tax in both cases are applied to the cost of labor. The 9% individual tax will *also* be applied to that cost of labor. That is a “hidden” payroll tax that is indicative of a VAT tax.
I’m still on the Cain train, but I’m sitting next to the door so I can get off if I think the train is headed for a town I don’t want to visit.
You are failing to include the hidden taxes currently in a product you buy.
Lets say you buy a widget from small business A.
To keep it simple, that widget costs $10 now.
The cost now includes:
Excise Taxes
Gross Receipts Taxes
Business Income Tax
Self-employment Tax (if applicable)
Franchise Tax.
(and more)
That $10 widget would include about $2.80 in its prices.
So now, you pay $10.00’
Under 999, that $2.80 in hidden tax is eliminated and replaced with 9% business tax (+.65c).. to bring the cost to $7.85 (($10-2.80)*9%) then you pay the 9% sales tax so the final out of pocket to you is $8.55.
$8.55 under 999 versus $10 under the current system.