> Harold Hallikainen wrote:
>
>> The other more interesting (to me) issue is that one who pays taxes is
>> to
>> benefit from those taxes. If someone in New York were to pay a
>> California sales tax, they would not benefit from that tax, since the
>> tax is for the benefit of the residents of California.
>
> The question about who benefits from a sales tax is not so easy to answer.
> In a sense both seller and buyer benefit from it, so it wouldn't be
> unreasonable (in the light of this argument) that the seller pays the tax,
> wherever he/she/it does business.
>
> (On a side note: That's how VAT in many European countries works, without
> the complications of sales tax.)
>
> The fact that the buyer pays it is just an arbitrary convention; it could
> just as well be the seller. And so any arguments derived from this
> convention are just as arbitrary.
>
> Gerhard


OK, that's interesting! We can assume it's always the seller that's paying
the tax, then the seller includes that as a "cost of doing business" in
the price charged the buyer. Since the seller IS within the jurisdiction
of the taxing authority, the seller DOES benefit from that tax...

Sales tax law here is complicated and full of exceptions. Food, other than
snacks and food eaten on the premises, is not taxed. Most other retail
items are. Taxable items bought for resale (like PICs) are not taxed.
Instead, the final product is taxed. I've kinda thought it would be
interesting to have one very low sales tax that applied to everything,
whether it was for resale or not. This would increase the cost of items
with long supply chains, but probably a very small portion of the existing
markup by each entity in the supply chain.

Does VAT stand for Value Added Tax? How does this work with a chain of
suppliers, each adding some value?

Harold


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