I just finished reviewing the 2013 National Association of State Budget Officers 2013 Budget Survey. Even though some elements of this may be estimates, I still believe that the information is directionally accurate in showcasing where the revenue will be coming from. https://www.salestaxstrategies.com/sales-tax-issues.html
For 2013, the report shows total estimated revenue of $572.882 Billion. Of this amount, $219.340 billion is from sales tax, $307.768 is from personal income tax, and $45.774 billion is from corporate income tax. As percentages, this is 38.29%, 53.72%, and 7.99% respectively. For 2014, the reports shows a 4.5% increase in sales tax revenue ($9.886 billion) and a decrease in personal income tax of about $1 billion. Corporate income tax is expected to grow by about 3% or $1.43 billion.
The state leading the pack for expected increases in sales tax are California, Florida, New Jersey, Ohio, and Texas. Unlike the personal income tax projection, no state showed any decline in sales tax collections.
The growing reliance on sales tax as the primary source of new revenue for 2014 likely comes from a combination of the following events:
1. Increases in tax rates
2. Increases in tax base (expansion of tax to services, removal of exemptions, expansion of tax base to digital products)
3. Expectation of increases tax collection and remittance from remote sellers
4. Increased enforcement from auditors and delinquent tax collection people
5. Increased awareness and voluntary compliance by multistate businesses
As I’ve reported for the past several years on this site, sales tax is quickly becoming the revenue of choice by states as they continue to seek revenue to cover the expansion of state services required by new state programs and the imposition of rules by the federal government. In most cases this burden will fall on your business, either as the consumer of taxable items or as the seller of taxable items and services. Either way, the cost of non-compliance can be significant and catastrophic to your business if you are not fully aware of your responsibility.
Please contact me if you have any questions.
Ned Lenhart, CPA
President