Second of all, a VAT of 16% ( which is what Cruz is asking for ) has to be added to EVERY SINGLE PIECE of something produced, along the line, with yet another 16% added to the finished product. That AND his suggested 10% income tax, which also excludes any and all deductibles, makes even scraping by, IMPOSSIBLE for most people.
It also means that every single company becomes an arm of the Fed Government and part of the IRS; which heavily adds to the cost of doing ANY business at all!
OTOH, Trump's idea of re tariffs, is ONLY applied to businesses outside of the USA, including American ones, at 35% per finished product! It is his way of getting American companies to make their products HERE and to curb the game playing with deflating foreign currencies, which the Chinese and some other nations engage in.
I hope that this makes it clearer to you.
>>Second of all, a VAT of 16% ( which is what Cruz is asking for ) has to be added to EVERY SINGLE PIECE of something produced, along the line, with yet another 16% added to the finished product.
Not according to the analysis done at the tax foundation (or the Tax Policy Center (Brookings - ie. the Left).
Cruz’ plan is a “subtraction method VAT” unlike many of the Euro plans. No double dipping.
http://taxfoundation.org/blog/ted-cruz-s-business-flat-tax-primer
How Would It Apply To an Ordinary Business’s Income?
The starting point for a subtraction-method value-added tax is pretty simple, especially when it comes to everyday private businesses. You start with all of a business’s revenues. (Most likely, this tax would be filed on a quarterly basis.)
However, you don’t stop there: a problem with counting all business revenues is that it ends up being a double-counting. For example, suppose you love watching Disney movies on Netflix. Netflix gets revenues from your subscription, and then it uses some of that money to pay Disney for the rights to Disney content. If we counted that money both at the Disney level and the Netflix level, we’d end up taxing the same basic product twice, merely because it involves two different companies. This is not good tax policy; that’s why modern tax systems try to avoid this.
The way the subtraction-method VAT fixes this is by, well, subtraction. Under this kind of tax system, Netflix would count all of its revenue, but then subtract the amount that it pays to other businesses, like Disney. Disney would then have to account for its own revenue and also file taxes. ****The result is that everything gets neatly single-counted, and nothing gets double-counted.****
There’s also one other thing the tax subtracts: capital costs. That is, when Ford builds a new auto plant, it can deduct those business costs as well. This is an important aspect of the tax, and it marks a slight difference with corporate income taxes today (which also allow these costs to be deducted, but over a much more complicated schedule.)
Exactly right and Trump’s tarrif’s would only apply if companies outside the US do not play by the rules....it is his Trump card...as it were....and it would not last long