When I refered to the VAT (and I believe when Lindsey refers to a VAT) I am refering to a Eurpoean style VAT where products have a tax added at each stage of the production process. THe tax is at a lower rate and is "hidden" from the consumer. A single item is taxed at multiple points. A NRST like 2525 avoids this problem by taxing the item only at the point of sale.
In the Case of the Flat Tax it depends on How the tax is implemented (and in any tax reform proposal the devil is in the details!) Some proposals, tax Corporate profits (gross revenue minus plant, equipment and wages) then taxes the employee wages, In this case the revenue is taxed only once at it's point of origin. Ohter variations remove all business taxes, and tax the vusiness owner (shareholder) dividends (or in the case of stock sales capital gains) at the same rate as any other income. This is to avoid the political canard of the 'rich' not paying taxes on their interest income.
The current system is a real VAT also in the case of business income and captal where revenue is taxed 2-3 times and rates going well over 50%.
It is interesting that Hall Rabushka and Mitchell describe the Flat Tax as a Consumption tax the same as an NRST such as HR2525 or the Tauzen NRST.
Thanks for the link!
The current system is a real VAT also
Not far from it, you're starting to learn:
http://www.taxfoundation.org/foundationmessage03-00.html
"Under the WTO definition of the term, a sales tax is an indirect tax, as is an European-style VAT. The economic equivalence of an European-style VAT and a subtraction-method VAT is well-established. A subtraction-method VAT is essentially identical to a business income tax except that all purchases of plant and equipment may be expensed, rather than depreciated as under current U.S. law."
It is interesting that Hall Rabushka and Mitchell describe the Flat Tax as a Consumption tax the same as an NRST such as HR2525 or the Tauzen NRST.
By the economist's equivalencies, any tax that does not tax investment is a "consumption" tax, regardless of its mechanics.
Consumption = Income - Investment
Retail taxes are applied to the left side of the equation, VATs to the right side of the equation.