What is a gross income tax?
The gross income tax is imposed on the total income of the company regardless of the source. Politicians prefer because they usually increase a significant amount of income at apparently low rates, criticizing economists and political analysts, because it has a great influence on the market, is not transparent, and eventually moves a disproportionate amount of tax burden on high levels, low profit society. In the United States, few states impose this tax, but this concept is regularly revived and reviewed by states that seek to strengthen their income. In those countries that deposit this, the tax rate is below 1% except for the new Mexico, where the tax on gross revenue at 5% also acts as a tax on the state turnover. Most jurisdictions all allow little, if at all, deductions or other gross taxes of income.
As a turnover tax, the gross income tax that takes place in the state is imposed on the SA. Unlike the turnover tax, howeverIt eases for retail sales, but is deposited on every transaction in the state. This leads to a phenomenon called tax pyramiding, which means that the same goods or services can be taxed several times, leading to a higher effective tax rate. For example, a wooden combine will pay a gross income tax on the sale of timber. The saw will pay tax on the sale of milling timber to the furniture company and the furniture company will pay the tax on the sale of finished furniture to the store. Finally, the furniture trade will pay a gross income tax on the sale of furniture to the final consumer. While the furniture was taxed once, the wooden component was taxed four times.
Theoretically, it is easy to show how the tax pyramid increases the effective tax rate. In fact, the relationship between them is murky. Washington's state analysis on the gross income indicated that the pyramiding occurred in the range of one - no pyramid, so the only tax paid is for sale to the final consumer - and 6.7 times, for some goods produced. Opposite to tHowever, the OMU effective tax rate ranged from a low 0.32% gross income for agricultural, forestry and mining sectors to a high 0.93% for traffic, communication and public services sectors. In the manufacturing sector, which had the highest level of pyramids, the average effective tax rate was about 0.42% of gross income.
, however, is that the highest rate is almost three times the lowest rate, although both rates are less than 1%. This may be a significant factor affecting business decisions for these companies that pay the highest rates. Proponents of gross income tax point to this data to reduce the impact of the pyramid on an effective tax rate. Opponents, however, point to other disadvantages that they claim to be in the concept of own taxation of gross income.
The first is that the difference in effective tax rates can encourage some businesses to integrate vertically. This means that instead of buying raw materials or other goods from other businesses they buy or connect with theseOther businesses or start their own operation to create a raw material and eliminate the taxable transaction. However, it is generally recognized that good tax policy should be neutral; There should be no effect in the company's decision -making process. Thus, a tax policy that affects business decisions is not a good policy because it replaces the market as a major influence in decision -making.
gross income taxation also discriminates with a high volume of low businesses, as the tax is set before any business costs such as work. Gross income would pay with low profitable sectors such as grocery stores such as IPTS food stores with the same rate as pharmaceutical companies, although the pharmaceutical industry is about seven times more advantageous than food.
Finally, the gross tax on taxpayers obscures the actual tax rate and the cost of the government. The consumer who buys a piece of furniture has no way to find out how many times the tax was imposed on hisBuy and its components, nor can consumers learn the actual effective tax rate on various consumer goods.