There is one difference, at least in Canada’s implementation of VAT, to what you describe. Each company DOES pay VAT on what they buy, and charge VAT on what they sell, but what they pay the government is the difference of the two.
In other words, if I pay $100 in taxes on raw materials, and I charge $250 in taxes on finished product, I pay $150 ($250-$100) to the government in taxes. Implementation of VAT therefore becomes the Accountant and Tax Collector full employment Act, because that is a lot of bookkeeping.
The other big question that comes in on a VAT, would be if VAT and state sales tax are both paid on purchase, or is one charged on the total of purchase and the other. In other words, lets say you had a 10% State Sales Tax, and a 10% VAT. If both were charged only on the purchase, you would have $20 ($10 each for state and federal) on a $100 purchase.
However, if one was positioned superior, say the federal, then you pay $21 in tax. The $100 purchase is taxed 10% ($10) at the state level, giving you $110, then THAT is taxed at the next 10% for your federal tax, which would be $11, for a total purchase of $121.
All this being said, I have heard nothing about Cain’s plan that would implement a VAT, but the final issue, about precedence, will certainly need to be clarified, because it would still apply to a sales tax.
Or, if income taxes and a sales tax are paid on the same purchase...
In other words, your argument doesn't make sense. A VAT and retail sales tax are no more tied together than a state income tax is tied to a state sales tax.
Michigan currently has a state income tax, a state VAT (known as the single business tax--SBT), and a state retail sales tax. They are in fact, three totally different tax systems. The existance of one doesn't preclude or encourage the existance of another.
Sorry you are dead wrong in your analysis. Under 9-9-9 all Business purchases, including those for investment goods, are tax exempt.
Those talking heads who bring up VAT in regards to 9-9-9 are being intellectually dishonest
A VAT taxes at every level of production and hides the cost of the tax inside the cost the consumer pays for the good. 9-9-9 taxes only at the final point of sale and as an add on is clear to the consumer as a tax instead of hidden in the cost of the good.
Those talking heads who bring up VAT in regards to 9-9-9 are being intellectually dishonest
A VAT taxes at every level of production and hides the cost of the tax inside the cost the consumer pays for the good. 9-9-9 taxes only at the final point of sale and as an add on is clear to the consumer as a tax instead of hidden in the cost of the good.