I appreciate HN is USA-centric, but over on this side of the pond it's nowhere near as simple as that.
> If you pay taxes on your income and then use it to buy something from me, I have to pay taxes on it too. That's my income now.
Except that companies - even one person companies(!) - generally pay taxes on their profits, not their total income or revenue.
- an indirect tax on the vast majority of goods and services
- borne by the final consumer, not by businesses
- charged as a percentage of the sales price and collected fractionally at every stage of production and distribution
- neutral, as the tax borne by the final consumer is the same regardless of the length of the supply chain"
And the final consumer of a good can also be a business, in which case VAT is still paid for that good. For example, if you buy a company car for use by your employees, you can't get back the VAT on that purchase (only if you buy a car to sell it on to someone else can you get the VAT back).
And, of course, given that consumers make purchase decisions based on the nominal price of a good, which includes the VAT, the market price of a good will depend on VAT as well. If an increase in VAT risks to push the price so high that demand decreases, companies can choose to reduce the price before tax so that the final price is low enough not to affect demand.
So, again, VAT is essentially a tax on all sales revenue a company makes. It's true that it doesn't apply to other sources of revenue.
Businesses collect it on sales to their consumers (output VAT) and offset any VAT they've paid to their suppliers (input VAT) and the balance is paid to the state.
As that taxation-customs.ec.europa.eu article states: "VAT is borne by the final consumer, not by businesses."
(Source: I've been personally registered for VAT, I've worked for companies who were registered for VAT, I've had customers who were registered for VAT).
There's a ton of nuance there, sometimes intended to avoid certain negative consequences that feel like double taxation or that provide peverse incentives. But that's the general premise.
If you pay taxes on your income and then use it to buy something from me, I have to pay taxes on it too. That's my income now.
If my father paid taxes on something he earned that's his tax bill. When I get it, I have to pay too. That's my income now.
This is very clear and consistent. Outside of all the people with an interest in pretending otherwise.
Also worth noting that there's no state interest whatsoever in preserving generational wealth. Just none. The fact that kids have to earn their own money instead of a family coasting for generations is a good thing for the most part.