Sales Tax Essay Example for Free

gross gross gross gross revenue Tax EssayOBJECTIVE The objective of this work is to discuss gross revenue tax issues from the ascertainpoint of both the citizen and the Budget Director. Re supposeed will be issues of volatility, reliability, and equity as thoroughly as how the sales tax impacts activities of political relation such as economic development, companionship initiatives and service provision. ultimately this work will answer the question of whether there atomic number 18 any other taxes or revenue sources to substitute for the sales tax as well as stating why or alternatively why there is not an existing substitute. INTRODUCTION SALES TAX ECONOMIC DEVELOPMENT Sales taxes are collected at the local and state levels and utilized by the government in service provision to the citizens of the United pleads. The United States imposes sales taxes in both state and local administrations in which the customer is charged a combined rate which bundles together (US A Sales Use Tax, 2006) the state tax with the local tax. A merchant is required to charged a sales tax if the business has nexus. A nexus is defined as a substantial physical presence. (USA Sales Use Tax, 2006)Not all products are subject to the sales tax and different states exempt difference products. Sales taxes are applied on the mop up purchase of goods in retail sales. Economic development has been defined as a multi-faceted approach to the development of policies and programs designed to preserve, enhance and promote a spirited and successful business community. (Economic discipline Action Program, 2005)The health and success of the businesses in communities are stated to be directly linked to the quality of life experient by residents in that community (Economic Development Action Program, 2005) which is of primary importance to the entire city or municipality. Creation of jobs and generation of sales tax revenues come through a major contribution to fund the initiative s of service provision with the city. The economic development within a city of municipality is greatly dependent on sales tax revenues in most U.S. states. VOLATILITY, RELIABILITY, AND EQUITYVolatility and Reliability are the two primary considerations of a budget director when revenues raised by taxes are spent on new initiatives. Hirsch et al state that Reliability and Volatility are that which marks the outcome of the question which asks Are new revenues raised by the taxes relatively stable over time or are they excessively volatile and difficult to predict? It is a fact that generation of revenues from sales taxes may be unpredictable since these revenues are greatly dependent on seasonal factors and economic conditions therefore, merchants may experience a really great Christmas hence the sales tax revenues for the government will be great as well however, a lean year for merchants will also result in the coffers of the government for spending in economic development being q uite thin as well. In a journal article relating to the impact of sales tax on the economy of the state of California it is stated thatIf times are good and consumption is high, there will be more revenue from sales taxes than otherwise. If times are bad and layoffs and unemployment are up, personal income taxes will be reduced. Some taxpayers will lose their jobs or not have opportunities to work overtime. huffish economic activity will hurt profits and thus collections from corporate income taxes. Similarly, if times are bad, certain kinds of welfare-related expenditures may increase. While the linkage between economic developments and the status of the budget is clear, the actual budget process involves making a forecast of what those economic developments will be. Then budget forecasters must estimate but how the assumed developments will affect revenue (Hirsch, et al, 2004)The third element is that of Equity which is one of the five principles stated by the National Conferenc e of State Legislatures (NCSL) that were compiled in 1988 with input from lawmakers and academics. The principle involving Equity along with the other principles for sound tax policy. The five principles are(1) Provision of appropriate revenues (sufficiency, stability, and certainty of revenues produced)(2) Neutrality(3) Equity(4) wanton and economical to administer(5) accountability (i) taxpayers are accountable for payment of their taxes(ii) tax agencies are accountable for administration and enforcement of the tax laws efficiently and fairly and(iii) lawmakers accountable for the fairness of the tax laws. (Hirsch et al, 2004)III. VIOLATION OF PRINCIPLES IN NEW YORK ECONOMIC DEVELOPEMNTIn a recent testimony before the U.S. Senate in a hearing before the Subcommittee on International job of the Committee on Finance earlier this year given by Walter Hellerstein who is said to be the nations leading legal academic ascendency on state and local taxation stated is that a New York e conomic development incentive to attract sales to the New York exchanges was a sexist tax to the Boston Stock Exchange that viewed the incentive as diverting economic activity from the Boston exchange, a view with which the U.S. Supreme Court concurred. (Testimony of Walter Hellerstein, 2006) tell as well is that the economic development incentive for its fledging wine industry was a discriminatory tax to sellers of alcoholic beverages produced in other states, a view with which the U.S. Supreme Court concurred. (Ibid)SUMMARY AND CONCLUSION Clearly the sales tax scheme or plan of a city or municipality involves the necessary view which is all-inclusive of the factors that will impact the revenues realized from sales taxes and as well are able to realize the volatility or alternatively the reliability of the sales tax revenues in the budget plan. Then the comprehension of the sales taxes as they affect the individuals within the community both from the advantages of the economic de velopment in the community as well as the impact the increase of sales tax will have on the spending habits in times that are characterized by layoffs and unemployment in the area.Finally it must be comprehended that all of this is inherently linked in the planning of sales taxes, city budgets and economic development in that economic development works to ensure a healthy and quality lifestyle for the taxpayers that reside in the community, and as well that economic development furthers the evolution of businesses and employment within the community.These successful individuals and households within the community in turn replenish the community or city coffers with the sales taxes on the purchases that they make in the community thereby funding even more economic development in the community. Last, the principles that have been reviewed in this research as set out by the National Conference of State Legislatures (NCSL) must be followed in order to avoid the situation that the econo mic development initiatives in New York and Hawaii experienced in being found in violation of those principles by the U.S. Supreme Court.WORKS CITEDTestimony of Walter Hellerstein before the U.S. Senate Hearing before the Subcommittee on International Trade of the Committee on Finance (2006) Online available at http//64.233.161.104/search?q=cacheEnVhxxKAqIYJwww.law.uga.edu/news/advocate/spring2006/hellerstein.pdf+seconomic+development+sales+tax+issueshl=engl=usct=clnkcd=17Economic Development Action Program (2005) City of Bothell nd Online available at http//www.ci.bothell.wa.us/dept/CM/EconDev/ActionProgram.htmlOne Taxpayers Economic Development Incentive Is Often Anothers Discriminatory Tax.(Advocate Spring/ summer 2006 Online available at http//64.233.161.104/search?q=cacheEnVhxxKAqIYJwww.law.uga.edu/news/advocate/spring2006/hellerstein.pdf+seconomic+development+sales+tax+issueshl=engl=usct=clnkcd=17Hirsch, Werner A. et al (2004) Making Californias State BudgetMore User-Friendly And Transparent Online available at http//www.spa.ucla.edu/calpolicy02/HirschEtc.pdfUSA Sales Use Tax, (2006) http//www.ustaxnetwork.com/