State governments have traditionally raised revenue from business by taxing corporate income. But in recent years the growing difficulty of administering state corporate income taxes has prompted a resurgence in one of the world's oldest broad-based tax structures: the gross receipts tax, also known as the "turnover tax." Gross receipts taxes have a simple structure, taxing all business sales with few or no deductions. Because they tax transactions, they are often compared to retail sales taxes. However, while well designed sales taxes apply only to final sales to consumers, gross receipts taxes tax all transactions, including intermediate business-to-business purchases of supplies, raw materials and equipment. As a result, gross receipts taxes create an extra layer of taxation at each stage of production that sales and other taxes do not—something economists call "tax pyramiding."
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Idaho officials believe not enough businesses are looking at their state when deciding to expand or relocate. Unfortunately, the proposed solution (PDF) – a new jobs tax credit – is unlikely to be the fix.
One of the more compelling reasons to pursue tax reform is the fact that the U.S. has the highest corporate tax rate in the developed world. Another compelling reason is that U.S. multinational corporations (MNCs) must...