Individual states have a sales tax, which is kinda like a VAT. Here in Dallas Texas gets theirs, as does the city, as does our local transit service. It adds up to about 8.5 cents on sales of stuff other than grocerys, etc. This is added onto the price, so if I walk into Guitar Center and plunk down $149 cash for the upgrade they'll want another ten dollars or so - which is not included in the advertised price. And state governments are trying to find a way to tap into the internet business to replace taxes lost by local brick and mortar stores. Does that make our European users happier?
The Federal US government, instead of sales, taxes an individual's income. So if I make the medium income in the US, about $50,000 (35K pounds or so), my taxes come off the top. As an individual businessman, before I saw anything in my bank I would pay over 6% to Social Security as an individual plus another +6% as the business owner. Add to that another 2.2% for medicare/medicaid (health care for the old and poor). So I see less than $43K, which is then taxed on a complex sliding scale including deductions for yourself and kids (this doesn't included any business expenses, which come out before it reaches me). Enough kids (3) and you don't pay much. A single swinger could be paying thousands, which brings take home pay closer to the VAT rate on $50,000. Those kind of taxes don't show up in Cake's billing or advertising, since it has come off my income and Cake doesn't have to include them.
However, I take software off through business expenses so I guess I get the last laugh, since I'm only paying around 14% taxes on the $149, not 28%. Bigger businesses don't even pay the 14% since they write stuff off before hitting the individual.
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