Discussion of value added taxes

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1. A furniture manufacturer sells $500,000 worth of tables, chairs, and other items in a given year. The manufacturer earns a profit of $100,000 that year. His purchase invoices indicate that he bought $200,000 worth of lumber, varnish, nails, and other materials during the year. His labor costs were $150,000, and he purchased $50,000 of new equipment that year. Calculate his tax liability under a 15% consumption type VAT. Give examples of different types of alternative VATs, and explain their use.

2. What is a VAT? Give an example of VAT in other nations.

3. What is the difference between centralized and decentralized government? What are the advantages of a federal system of government?

Reference no: EM1359572

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