text: Of course many businesses will have cost (0+ / 0-)
  I'm not sure if the gross business receipts tax would have to be even 3% to cover the revenue currently covered with payroll taxes. Because of the removal of the payroll withholding which removes 25% of gross payroll dollars before they can circulate in the economy, the new tax would automatically increase economic activity. I do not have a way to accurately model this which makes it difficult to settle on a accurate rate required to replace payroll taxes.
  by RMForbes on Wed Sep 08, 2010 at 06:57:13 AM PDT
  [ Parent ] What matters is that some businesses
  after paying payroll, after paying expenses, won't clear 3% of the gross to be able to pay those taxes. Even if the payroll tax goes away. You don't want companies taking out loans to pay their income tax.
  by elfling on Wed Sep 08, 2010 at 10:41:20 AM PDT
  [ Parent ] And you still miss the point
  the current payroll taxes increase the cost of payroll, it's accounted for on the cost side of the ledger. The new tax also is an included cost of doing business and it too is accounted for on the cost side of the businesses ledger. Profits and profit margins are calculated after all costs are removed including the cost of this tax. If the profit margins decrease as they will for some of the larger businesses and big corporations, yes they might need to raise their prices slightly.
  Every business we deal with and we deal with hundreds, have an average labor cost of about 45%. Some of the larger chain stores have labor cost down around 30%. Some of the smallest operations which out number the larger ones by about 2 to 1, have payroll costs of over 50%, some as high as 60%. Yes the payroll tax only increases the cost of most business by a little over 9% which is about 4% of these businesses gross receipts but their customer will have 25% more available income to spend on their products or services. The payroll dollars will stay circulating in local communities longer because the 25% payroll withholding does not get removed from the economy before it circulates, instead it is removed slowly every time it changes hands. This will rebuild our economy from the ground up, the way economies operate naturally.