The value they add is their selling price minus the cost of materials, labor and overhead. Isn't that profit?
Value add includes the cost of labor and overhead.
Gross profit is basically sales minus expenses, which would include physical plant overhead, labor, and materials cost (along with a few other things).
Value Add is basically the sale price of an item, minus the material cost (which would have been a “sale price” to the supplier).
Cain’s plan doesn’t allow business deductions, so the labor and overhead are taxed. That makes the tax apply to the costs of the business in addition to the profits, which is why it is more like a value-add tax.
What we don’t know is whether Cain’s plan allows business deductions for capital costs (things purchased not FOR the product, but to help produce the product). We know he taxes labor and other normally deductable items, but there is not enough detail yet to know whether he left any deductions.