Generally, the total cost of gross receipts taxes is passed on to the consumer, either in part or in whole, usually without any indication to the consumer that the tax exists. With a gross receipts tax, every step of the chair's production is subject to taxation, including the cost of the lumber and any machinery used, the transaction between the manufacturer that produced the chair and the wholesaler that will sell it to the customer, and the sale of the chair to the consumer. With a simple retail sales tax, only the consumer that purchases the chair is required to pay taxes, with the amount the customer must pay reflected on their sales receipt. Depending on the nature of the business, the gross receipts tax can be between 0.1037 percent and 2.0736 percent.Ĭonsider how these taxes may apply to a product like a chair. No matter the source of a transaction, a gross receipts tax is levied against the money a company receives from selling its services or goods. Gross receipts taxes differ from common sales taxes because while regular sales taxes usually only apply to retail transactions, a gross receipts tax applies to company sales that are made throughout the process of production. A gross receipts tax is a method of generating revenue that has become increasingly attractive to these states in recent years. In order to address these issues, officials are searching for new revenue generation methods that can be implemented without writing new laws. Many states struggle with fiscal problems, including flawed tax systems and expensive government programs. The Delaware gross receipts tax, which is similar to sales tax, is applied to a wide range of transactions to increase state tax revenues.

De gross receipts tax