“Generally, the only places with gross receipts taxes today are U.S. states and developing countries.” –Professor Richard Pomp, University of Connecticut
As the economy shifts to a digital one, we are finding that states are turning toward unconventional revenue options. One trend we’re seeing is the surprising comeback of the gross receipts tax (GRT):
- Oregon’s new Commercial Activity Tax (CAT) takes effect January 1, 2020. Oregon officials are currently writing rules to implement it. Portland, Oregon also adopted a 1% gross receipts tax, imposed only on big businesses, starting January 1, 2019.
- San Francisco voters imposed an additional gross receipts tax on businesses with receipts of more than $50 million beginning January 1, 2019. This is on top of the gross receipts tax that was phased in from 2014 to 2018 to replace the city’s payroll tax.
- Nevada’s Commerce Tax took effect July 1, 2015, imposing differing tax rates on 26 categories of business with over $4 million in receipts. Part of the revenue was to reduce the state’s MBT payroll tax, but legislators suspended those reductions this year; it’s now in court.
- Serious proposals to adopt a statewide gross receipts tax keep coming, with the last three years including Louisiana, Missouri, Oklahoma, West Virginia and Wyoming. A San Jose, California gross receipts tax proposal was approved to gather petition signatures in 2016 but eventually morphed into a business license tax overhaul.