Jazmin J. Robinson

A Value-Added Tax, or VAT, is a fairer, modern version of the sales tax.

Right now, the U.S. mostly uses sales tax, which is charged only when you buy something at the store. A VAT, instead, collects small taxes at each step of making and selling a product, but only on the new value added. That ensures corporations pay their fair share in taxes, while essentials like groceries, medicine, public transit, and home energy stay tax-free under the H.E.A.L. Act.

Here’s an example: imagine your morning cup of coffee.

1. A farmer sells beans to a roaster for $1, they pay VAT on that $1 of value.
   
   
2. The roaster sells roasted beans to a cafe for $3, they pay VAT only on the extra $2 of value they added.
   
   
3. The cafe sells a cup to you for $5, they pay VAT only on their added $2 of value.

Each step adds a little more value, and each pays a small share of tax fairly.
By the time you buy your $5 coffee, the total VAT might be about the same as a normal sales tax, but it’s been shared fairly across every business that profited along the way.

Almost every major country, like Canada, the U.K., France, Germany, Japan, and Norway, uses a VAT to fund public healthcare, childcare, and education.

The H.E.A.L. Act replaces today’s patchwork state sales taxes with a national VAT, ensuring every state keeps its share while ensuring corporation pay their fair share of taxes.