Re:For the first time on record, the 400 wealthiest American...
by AnthonyMouse on Tuesday October 08, 2019 @12:28PM
(#21194002)
The problem with it is that it creates a powerful incentive for vertical integration and puts everyone else out of business.
If you have a product that goes from mine to mill to factory to wholesaler to retailer to consumer, the tax is paid five times. But if the same company owns the mine as operates the retail store, it's paid only once.
That's an insurmountable advantage for vertically integrated companies, so no others remain and tax-wise you end up with the same result as sales tax or VAT (i.e. the tax is paid on the total final value) except that you've needlessly destroyed every non-vertically integrated business.
That is the problem that VAT solves, by giving longer supply chains the same tax treatment as vertically integrated corporations.
If you have a product that goes from mine to mill to factory to wholesaler to retailer to consumer, the tax is paid five times. But if the same company owns the mine as operates the retail store, it's paid only once.
That's an insurmountable advantage for vertically integrated companies, so no others remain and tax-wise you end up with the same result as sales tax or VAT (i.e. the tax is paid on the total final value) except that you've needlessly destroyed every non-vertically integrated business.
That is the problem that VAT solves, by giving longer supply chains the same tax treatment as vertically integrated corporations.