The support of the Gross Receipts tax have argued that is most fair and progressive way to fund expanded State Government spending. Ignoring for the moment whether or not
In reality a lot if not all of this tax will be passed on to the consumer in the form of higher prices for every good and service sold in the state. This will have a large impact on lower income consumers that spend all of their income on goods and service and have lesser effect on middle and upper-income consumers that save a percentage of their income. If the Gross Receipts tax raises the price of all goods and service in the state by one percent, which could well be an underestimate, so a low income consumer will see one percent more of their income going to the state in the form of an indirect tax, for example some one that earns $20,000 dollars a year would be paying 200 dollars more in indirect taxes to the state and their effective income would be decline by 1 percent. While on the other hand some one that earns 50,000 dollars a year but saves $10,000 a year would be paying additional 400 dollars because of the Gross Receipts tax a year, but would see their income reduced by only .8 percent because they saved a portion of their income. Some one that earn 200,000 dollars a year and saves 50,000 dollars would be paying 1500 dollars year, but would see their effective income reduced be only .75 percent a year. Since the richer people are the higher percentage of their income they save, the higher income groups will see their income reduced by less than lower income groups. This is regressive and exacts same as the sales tax, the only difference is the sale tax is visible to everyone when they buy something and the Gross Receipt tax will be hidden.