What is the different between a Sales Tax and a Value Added Tax? The USA has a sales tax which is applied at the point of sale, in states which have a sales tax. During the Democratic Party primaries, one of the candidates, Andrew Yang, proposed moving to a Value Added Tax (VAT), which his platform claims to be in place in 160 countries.
It terms of process, it seems that with a VAT, companies must charge the end tax even when selling to other companies, but only pay the tax collection agency the difference in what was collected and what was owed. With a sale tax, it seems that companies do not collect any tax when selling to other companies
Hence, what is the difference between a sales tax and a VAT in terms of the amount of taxes collected? It seems that in both cases, the taxes are only applied to the end consumer.
Economically speaking the taxes are equivalent. There should not be any difference in collected tax between them in principle. However, in practice these differ in terms of what administrative burden they impose on firms and more importantly how easy it is to avoid paying taxes under each system. This can ultimately have some effect on the revenue that is collected.
Arguably under VAT government gets to collect more information that can be used during audit to stamp out tax fraud. On the other hand since under VAT companies get rebates on VAT they payed their supplier there are opportunities for companies to commit some additional tax frauds such as trading fictitious software between each other to reduce their tax cost or even receive VAT rebate from government.
This being said it is argued that on the net VAT is more efficient, especially when government wants to set consumption taxes relatively high (as when taxes are small the incentive to commit fraud is small as well). You can find some discussion of further pros and cons of each system in Zodrow (1999).
Addendum: as Brian points out in comments in practice most nations with sales tax have smaller coverage than VAT but this is a result of political decisions rather than any inherent property of either VAT or sales tax. There is no a priori reason to think VAT would solve the political issues itself. Moreover, even though VAT is efficient at higher rates it’s mainly the tax rate rather than coverage that creates the efficiency argument.