[derriz]

VAT is the simplest of all taxes for businesses to deal with. VAT taxes business profits in a simple and completely unavoidable way before companies have a chance to throw their best accountants, lawyers and consultants at the task of minimizing corporation tax.

VAT is based on flows of cash so is trivial to calculate and to collect. Wealth taxes require valuation and are just too easy to minimize and are expensive to calculate, and difficult to extract. (E.g. I own shares in a family member’s small business via a loan I provided. What’s that shareholding worth for the purposes of a wealth tax?)

VAT acts also as a sales tax as well as a tax on “added value” - business profits - so replacing two separate tax regimes with a single trivial-to-calculate, difficult-to-avoid (requiring two parties to conspire together), easy-to-collect (cash-flow based) tax.

Without getting into the politics of taxation, it’s the best designed tax there outs.

[stephen_cagle]

Hmm, I'd never thought about the fact that a VAT tax requires two sides of a party in order to defraud. That is kind of neat and a beneficial property of VAT taxes I had never considered.