Two totally different animals, VAT and sales tax. The major difference is that there is no deduction or credit for any sales taxes paid under the US system. Businesses that purchase goods specifically for resale (like a department store) are exempt from sales tax on those goods, but not on ancillary expenses such as rent and administrative expenses. A few states have sales taxes on services, like accounting, legal, etc. Those sales taxes cascade many times over, as those business really have little cost of sales outside of salaries which are always exempt.
The State of Texas actually has a VAT on businesses. Businesses are allowed a deduction for their costs of sales (like European-style VAT) or salaries, whichever works out better for them. But Texas also has a sales tax for both businesses and individuals.
With that...class dismissed!
gatorcpa
