Talk:Gross receipts tax

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[edit] 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)

[edit] 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)

[edit] Blackmarket

Something should probably be said about the theory behind a gross reciepts tax. The sales tax entry says,

• ... 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.

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)