Sales Taxes paid by Employees vs. Industry



  • Official comment
    Brian Barlow


    Thank you for reaching out to IMPLAN Support. 

    Taxes that are generally levied by state and local governments as a percentage of the commodity's price. General sales taxes are typically shown separately on sales receipts and are typically levied as a standard percentage of the commodity's price. They include sales taxes collected by retail establishments, by wholesalers, and by service establishments. Selective sales taxes are levied on a specific commodity at a percentage that differs from that of the general sales tax. They include taxes on motor fuels, tobacco products, alcoholic beverages, public utilities, meals, hotel occupancy, and amusements.

    General sales taxes consist of all general taxes levied at one stage only (e.g. manufacturing or wholesale or retail) plus multi-stage cumulative taxes (also known as cascade taxes) where tax is levied each time a transaction takes place without any deduction for tax paid on inputs. 

    Below are two articles I believe help provide some insight as well:
    1) Tax Impact Report FAQ
    2) Tax Impact Report Information

    In response to your questions: 

    1. Does the reported sales tax revenue under Direct Impact include those taxes paid by employees from their household spending? Or is it only those taxes paid by the industry itself on its intermediate inputs with household sales taxes falling under induced impacts? - Taxes paid on spending household income by employees will be under Induced tax results. Tax employees pay on their income itself (i.e. income tax) will be under Direct tax results.
    2. If they are combined, is there any way to back out the sales taxes paid by the industry vs. those of the employees? - They are not combined.

    Thank you!

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    Thank you for your response! It makes sense that sales taxes paid by the industry itself would fall under Direct Impact, and sales taxes paid to business by households would fall under Induced Impacts.

    By the way, I had looked at the two documents you linked to in your response and I couldn't find an answer to my specific question about how sales taxes were distributed. It may be worth putting that into the documents themselves for future reference.

    Thanks again!

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