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Tax Topics

2009 Tax Stimulus
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Alternative Minimum Tax (AMT)
American Jobs Act of 2011
Brief Description of the Model 2013
Current-Law Distribution of Taxes
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Distribution of the 2001 - 2008 Tax Cuts
Earned Income Tax Credit
Economic Stimulus
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Expiration of the Bush Tax Cuts
Explanation of Income Measures 2013
Federal Budget
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Flow-Through-Enterprises
Guide to TPC Tables
Health Insurance Tax Incentives
Homeownership
How to Interpret Distribution Tables 2013
Marriage Penalties
Model FAQ 2013
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Presidential Transition - 2009
Recent Tax Stimulus Legislation
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Tax Encyclopedia Index
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Value-Added Tax (VAT)
Who Doesn't Pay Federal Taxes?
Working Families

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tax topics
 

Value Added Tax (VAT)

A value-added tax (VAT) is a tax on the sales of goods and services to consumers.  However, unlike a traditional retail sales tax that is collected only on final sales to consumers, a VAT is collected from businesses at each stage of the production process.  Under the most common form of collection—the credit-invoice method—all sales by businesses are taxable, but firms are able to claim credits for all taxes paid on purchases from other registered businesses.  The net result is that business-to-business transactions are untaxed and the tax base is equal to the full value of the final sale to the consumer.

Revenue and Distributional Effects of a VAT

See also:

The VAT and the U.S. Fiscal Crisis

See also:

Further Reading

See posts about the VAT on TaxVox, TPC’s blog