Re: Sales Tax
Companies are unaffected by VAT. Apart from the expense of the admit overhead.
Consumers pay VAT.
What Google and Facebook sell is advertising. So yes, they charge VAT to their customers, which they pay to the government. But their customers are businesses, and so reclaim that VAT from the government, when they do their VAT return.
The advertisers then charge VAT to the companies they work for, who also reclaim it. The music stops with the final customer who isn't VAT rated, and so can't claim the money back. Which is either the consumer or some tiny business earning less than £50k a year.
So VAT is a tax on things that we buy as consumers.
As I understand it, the US sales tax is only charge by retailers selling to consumers. So business to business transactions aren't subject to it. So it operates a lot more simply than a VAT system, but has roughly the same effect.
Corporation Tax is a levy on profits that companies make.
Turnover taxes and transaction taxes are another thing entirely. They have the highest distorting effect on the economy. The usual rule of thumb is that if you tax something, you get less of it. So if you tax economic transactions, you'll get less of them. Which almost by definition will shrink the size of your economy.
The EU stopped its financial transaction tax, because the Commission's research determined that it would shrink the economy so much that other tax revenues would fall more than the revenue raised by the tax. So it would earn negative money for governments and permanently shrink the economy. A tax on non-financial transactions would almost certainly be worse.
Biting the hand that feeds IT
