VAT stands for Value Added Tax—a consumption tax collected at every production stage. It's widely used in the EU and also in many Asian, African, and Latin American countries
The US tax system relies more on income and sales taxes rather than a VAT, which fits its historical and political context, though debates about reforming tax policy are ongoing
Sales tax is applied once at the point of sale while VAT is charged at each production step, allowing businesses to reclaim taxes on inputs, effectively spreading the tax across the value chain
VAT stands for Value Added Tax—a consumption tax collected at every production stage. It's widely used in the EU and also in many Asian, African, and Latin American countries
Is there a reason why the United States does not have a VAT?
The US tax system relies more on income and sales taxes rather than a VAT, which fits its historical and political context, though debates about reforming tax policy are ongoing
What is the difference between a sales tax and VAT?
Sales tax is applied once at the point of sale while VAT is charged at each production step, allowing businesses to reclaim taxes on inputs, effectively spreading the tax across the value chain