![]() Proponents claim that it is simple for both the government and business to administer, easy for the public to understand, broad-based, stable, and progressive. The tax is expected to generate enough revenue to replace the state share of the retail sales tax, corporate franchise taxes, and corporate income taxes. ![]() Illinois - Illinois policy makers are considering a 1% gross receipts tax to increase the foundation level for Illinois public schools, as well as to fund a host of educational accountability initiatives.Businesses may pass on the GET as a sales-tax-like surcharge but are not required to do so. Hawaii - Hawaii imposes its General Excise Tax (GET) as a gross receipts tax on all business done in Hawaii, at 0.5% for wholesaling and manufacturing, 0.15% for insurance commissions, and 4% (4.5% in Honolulu County) for all other activities.Florida - A tax of 2.5% is imposed on "gross receipts from the sale, delivery, or transportation of natural gas, manufactured gas, or electricity to a retail consumer in Florida," referring to utility companies (suppliers of electrical power).Delaware - Business and occupational gross receipts tax rates range from 0.096% to 1.92%, depending on the business activity.Alabama - Per Article 3 of the code of Alabama, the state has imposed this type of tax on most utilities.Several states in the United States have imposed gross receipts taxes. Criticism Įconomists have criticized gross receipts taxes for encouraging vertical integration among companies and imposing different effective tax rates across different industries. This is easiest to discern in jurisdictions like Hawaii where businesses are allowed to visibly pass on gross excise tax to their customers. Thus, the actual tax rate of a gross receipts tax is always slightly higher than the nominal tax rate. Īnother pyramid effect of the tax comes from the fact that such a tax by definition is levied against itself (in the sense that a business subject to a gross receipts tax will raise its prices to compensate, which in turn increases its gross revenue, which increases the tax owed, and so on in circles) and therefore amounts to a tax on tax. A gross receipts tax has a pyramid effect that increases the actual taxable percentage as it passes through the product or service lifecycle. This is compared to other taxes listed as separate line items on billings, are not directly included in the listed price of the item, and are not a factor in markup or profit on company sales. A gross receipts tax is often compared to a sales tax the difference is that a gross receipts tax is levied upon the seller of goods or services, while a sales tax is nominally levied upon the buyer (although both are usually collected and paid to the government by the seller). ![]() A gross receipts tax or gross excise tax is a tax on the total gross revenues of a company, regardless of their source.
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