GOP control of the Senate will prevent big tax increases from coming out of Washington. But this episode of What’s Ahead warns that state and local governments are ravenous for revenue. One new exaction they are eying would hammer both businesses and stocks: the gross receipts tax.
This levy is a direct tax on a firm’s revenue and doesn’t allow any deductions for expenses. It would be especially hurtful to small businesses, whose profit margins are often thin. It would also be a formidable barrier for startups, making it that much more difficult for them to achieve a profit. Business profits will be reduced, meaning less money for expansion and for boosting wages.
New Jersey, home to facilities that process trades for stock exchanges like Nasdaq, is considering a cousin to the gross receipts tax, that is, a levy on securities transactions. The exchanges are now looking to leave the state. Texas and other states beckon.