Gross Receipts Taxes: A Growing Threat
When states first experimented with gross receipts taxes nearly 100 years ago, legislators, businesses, and voters quickly learned that they cripple economic growth, conceal true tax burdens, and breed inefficiency. That’s why most states repealed them by the 1960’s.
Unfortunately, gross receipts taxes are on the verge of making a comeback. In November 2016, Oregon voted on one of the largest gross receipts taxes in U.S. history: Measure 97 (M97).
M97 would not only have cost Oregon more than 38,000 private sector jobs and significantly increased tax burdens for individuals and businesses, but it could have led to other states adopting similarly harmful tax policies.
Fortunately, the Tax Foundation was in Oregon for months before the vote, informing taxpayers, business leaders, and legislators about the harmful effects of gross receipts taxes like M97. Come election day, the measure was soundly defeated.
Tax Foundation: A Voice for Smart Tax Policy
Oregon’s Measure 97 is a prime example of the work we can do when a state faces a gross receipts tax proposal. In the months leading up to the M97 ballot initiative vote, no other group produced more in-depth and accessible research on the topic.
Throughout 2016, we published six indispensable resources for understanding M97 and gross receipts taxes more broadly:
- A history of gross receipts taxes in America, including the stories of four states that repealed them
- A comprehensive analysis of M97 and how it would affect Oregon businesses and residents
- A brief overview of the Oregon Legislative Revenue Office’s 20-page analysis of M97
- A four-part blog series highlighting how M97 would (1) raise consumer prices, (2) be the largest tax in the state’s history, (3) hurt job creation, and (4) disproportionately impact low-income residents
- A series of blog posts refuting research and common talking points from M97 supporters
- An academic review of the literature surrounding gross receipts taxes
This body of research was cited hundreds of times by leading media outlets in Oregon and across the country and continues to be the go-to resource for policymakers, journalists, voters, and business leaders trying to understand how a gross receipts tax could affect them.
An On-the-Ground Approach
High quality research is irrelevant if it goes unread. That’s why we take an on-the-ground approach to engage the people that gross receipts taxes really affect. When we learned of M97, our team of experts was in Oregon, presenting our findings to tax experts and business leaders, giving stakeholders the opportunity to ask questions, share concerns, and help identify solutions.
Building Relationships, Delivering Results
In every state we engage in, our team builds meaningful and lasting relationships with the legislators responsible for deciding tax policy. When a gross receipts tax is proposed, we meet one-on-one with policymakers to help them understand exactly how the tax would impact their state’s economy, businesses, and taxpayers.
Are you, your company, or your industry also concerned about the spread of gross receipt tax legislation and proposals?
Are you interested in working more closely with Tax Foundation experts to:
- Identify potential issues at the state or municipal level
- Provide insight or learn how these taxes impact your industry, company and customers
- Strategize about potential solutions
If so, we want to work with you. Please contact us at the link below to learn more about our program to educate policy makers, the media, and industry leaders about why gross receipt taxes should be avoided when crafting smart, principled state tax policy.