Sure it does on those things but this will be on everything. You guy a gallon of milk, the cost will be 16% more, or a pair of jeans...everything...this is a huge tax and it is also a tax well enough hidden that they can raise it easily without the consumer even knowing. This is a VERY BAD thing.
I’m not versed on the tax plan, but from I understand the intent would be to do away with all those add ons.
“Sure it does on those things but this will be on everything. ‘
Actually it is worse than that. It is on everything, several times.
The dairy farmer sells raw milk to the dairy and pays 16% on the value of raw milk.
The dairy food company sells the pasteurized milk to the cheese company and pays 16% on the added value between the raw and Pasteurized milk.
The cheese maker sells the cheese to a deli and the deli pays 16% on the added added value of cheese over the Pasteurized milk.
The deli buys the cheese and adds 16% to the added value between a block of cheese and a sandwich.
At no stage in this process does the VAT replace income tax or sales tax.
A VAT raise huge amounts of money by essentially taxing the same item over and over again.
This item in the tax plan by Senator Cruz is a good reason to not vote for him. The liberals would love this tax because they’d try to raise it as a hidden tax.
Actually it isn’t really a 16% tax. A VAT is a Value Added Tax, this means that at every stage of production as a value is added to X it is taxed at 16%.
Let’s say iron ore is $10.00 a ton, when sold to a user of the iron ore it is taxed at 16%. So now it’s value is $11.60. The foundry creates iron ingots that it sells for $20.00 a ton, it has to sdd the 16% tax on top of that price.
This continues on and on until the producr is sold to the end user.