The Unintended Consequences of Gross Receipts "Taxes"

A gross receipts tax is a levy on a business entity's total receipts that is typically assessed in lieu of an income tax. Gross receipts taxes are assessed on a broader base and at a lower rate than income taxes. Gross receipts taxes are also frequently assessed on all types of business, includ...

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Bibliographic Details
Published in:The Tax lawyer 2011-06, Vol.64 (4), p.901-937
Main Author: WRIGHT, KATHLEEN K.
Format: Article
Language:English
Subjects:
Apportionment
Corporate income tax
Corporate income taxes
Earnings trends
Evaluation
Federal taxes
Fees
Franchise taxes
Gross income
Gross receipts taxes
Income taxes
Interstate commerce
Intrastate commerce
Jurisdiction
Laws, regulations and rules
Limited liability companies
Limited partnerships
Personal property
Receipts
Retail sales
Sales tax
Sales taxes
State court decisions
State income tax
State taxes
Taxation
Taxpaying
Transportation services
Use taxes
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Summary:A gross receipts tax is a levy on a business entity's total receipts that is typically assessed in lieu of an income tax. Gross receipts taxes are assessed on a broader base and at a lower rate than income taxes. Gross receipts taxes are also frequently assessed on all types of business, including flow through entities such as S corporations, limited liability companies, partnerships, and limited partnerships, while income taxes are generally not assessed on flow through entities. States have adopted gross receipts tax structures in lieu of the traditional income tax as a means to expand their tax base under the guise of a relative ease of administration and the lack of complexity in their calculation. The movement towards gross receipts taxes has also been fuelled by the trend amongst states to decouple from federal law as Congress continues the extension and expansion of tax breaks. The States cannot afford these measures.
ISSN:0040-005X
2329-6089