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The Accounting Historians Journal Vol. 9, No. 2 Fall 1982 Robert P. Crum UNIVERSITY OF KENTUCKY VALUE-ADDED TAXATION: THE ROOTS RUN DEEP INTO COLONIAL AND EARLY AMERICA Abstract: This article indicates that even the most recent forms of taxation find their roots firmly planted in Colonial America. The author shows that the concepts: ad valorem, transaction basis, indirect levy, multi-step collection, and taxation of net product were present during this early period. Through the use of these con-cepts the historical justifications for the income and sales tax system are provided and indicate a trend toward combining these concepts into one tax. The value-added tax is such a tax. The author concludes that adoption of this tax would complete a trend in American taxation which "took root" in colonial times. In the United States the tax structure consists of transaction, wealth, and income taxes (which are transaction based). This study will investigate transaction taxes which contain concepts under-lying the value-added tax. Conceptually the value-added tax is a tax on the increase in value of a good or service resulting from production or distribution which is measured at each level of pro-duction or distribution by the difference between input and output transactions (net product). In its elementary form, it is a gross ex-penditure tax (measured by gross receipts of the output or selling company) allowing a credit for the taxes paid on inputs. Concepts underlying the tax are as follows: The tax is (1) value based (ad valorem), (2) transaction based, (3) an indirect tax levied upon ex-penditure, (4) multi-step, (5) taxation of net product (thus is non-pyramiding and noncascading; a net turnover tax). Several taxes (to be discussed in depth later), are evaluated for inclusion or ex-clusion of these concepts in Table 1. How each contributes to the development and integration of these concepts will be investigated from the historical approach. These developments can be classified as (1) development of graduated polls, licenses, and the property tax, (2) development of specific excises, (3) development of excises, income taxes, and licenses based on gross receipts, (4) develop-ment of general excises and sales taxes, and (5) value-added taxes. The income tax will not be investigated because it is a result of the development and integration of these concepts rather than their