Talk:Gross receipts tax

Reference
I know there is a good amount of information about Gross receipt taxes at the Tax Foundation. Morphh  (talk) 13:35, 4 February 2007 (UTC)

Hawaii
According to the entry at Excise tax,
 * "In lieu of a sales tax, the State of Hawaii imposes a General Excise Tax, or GET, on all business activity in the State. The GET is charged at a rate of 4% for most businesses and 0.5% for wholesalers. The tax is imposed on all business entities, so in essence, the tax is collected at every level of production (material supplier to manufacturer to wholesaler to retailer) producing a "cascade effect" effectively adding 16-18% to the price of consumables purchased at retail. The GET is also charged on all business service activity such as real estate agent commissions, lawyer fees and the like. With Hawaii's industry heavily dependent on tourism and tourist spending, the State regularly raises nearly half its government revenues through the imposition of the General Excise Tax.

Should this be considered among states having Gross Receipts rather than sales tax? I notice other states likewise give differing names to Gross Reciepts. Have Gun, Will Travel 02:50, 7 February 2007 (UTC)

Blackmarket
Something should probably be said about the theory behind a gross reciepts tax. The sales tax entry says, New Mexico has a Gross Reciepts Tax. A legitimate business gets a "gross reciepts exemption certificate" from the state. Then a contractor, for example, who purchases materials at Home Depot goes untaxed, and collects the Gross Reciepts from the end user. A fly-by-nite contractor (probably paying workers under the table), unregistered, unlicensed, and uncompliant with the state, will pay the Gross Reciepts when purchasing materials for resale. Hence the state still collects revenue from blackmarket operations. Then the underground operator still in turn usually collects Gross Reciepts from the customer, and pockets it, i.e. criminal theft of state taxes justly due. This is the intent of the Law. Have Gun, Will Travel 19:33, 7 February 2007 (UTC)
 * ... unlike a gross receipts tax levied on the intermediate business who purchases materials for production or ordinary operating expenses prior to delivering a service or product to the marketplace. This prevents so-called tax "cascading" or "pyramiding," in which an item is taxed more than once as it makes its way from production to final retail sale.

What is a gross receipts tax?
The article needs some work. First, a true gross receipts tax would impose the tax rate on -- what else -- the amount of gross receipts. In other words, if any deductions from gross receipts are allowed at all, the tax is not a true gross receipts tax; it's really just another kind of income tax. The new Texas margin tax, which is referenced in the article and even in some news media reports as being a "gross receipts" tax, falls into this category. It's not really a gross receipts tax at all.

The categorization of the Texas tax as a "gross receipts tax" is even more problematic when you consider that even with the Federal corporate income tax, the starting point in the computation is -- guess what? -- gross receipts. From the gross receipts number you deduct cost of goods sold (if any), and then all the other deductions allowed under the Internal Revenue Code. You arrive at a net amount called "taxable income," and the tax rate(s) is/are imposed on that amount. This computation structure is fundamentally the same as the computation of the so-called Texas "gross receipts" tax (although the allowable deductions are different).

I think the article needs to clarify this point. Any comments, anyone? Famspear 18:46, 12 April 2007 (UTC)


 * Dear readers: Due to lack of comments, I deleted the reference in the article to the Texas tax. the Texas margin tax (the updated version of the Texas franchise tax) was indeed originally advertised as a "gross receipts" tax but, as explained above, it is not a gross receipts tax. Famspear (talk) 15:35, 8 February 2008 (UTC)

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