A gross receipts tax or gross excise tax is a tax

Tax

To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...

 on the total gross revenues of a company, regardless of their source. A gross receipts tax is similar to a sales tax

Sales tax

A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....

, but it is levied on the seller of goods or service consumers. This is compared to other taxes that are listed as separate line items on billings, are not directly included in the listed price of the item, and are not a factor in markup or profit on company sales. A gross receipts tax has a pyramid effect that increases the actual taxable percentage as it passes through the product or service life-cycle.

Criticism

Economists have criticized gross receipts taxes for encouraging vertical integration

Vertical integration

In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or service, and the products combine to...

 among companies, and for imposing different effective tax rates across different industries.

United States

Several states

U.S. state

A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...

 in the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 have imposed gross receipts taxes.

• Arizona
  Arizona
  Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
  
   - Transaction Privilege Tax (TPT)
  Transaction privilege tax
  Transaction privilege tax refers to a gross receipts tax levied by the state of Arizona on certain persons for the privilege of conducting business in the state. TPT differs from the “true” sales tax imposed by many other U.S. states as it is imposed upon the seller or lessor rather than the...
  
  
• Delaware
  Delaware
  Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
  
   - Business and occupational gross receipts tax rates range from 0.096% to 1.92%, depending on the business activity.
• Hawaii
  Hawaii
  Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...
  
   - The Hawaii General Excise Tax (commonly abbreviated as GET) is charged on the gross income of any business entity generating income within the State of Hawaii. The GET rate is 4% charged on all business income except for two exceptions: insurance agents commissions are charged at a rate of .15% (.0015) and income from wholesalers, manufacturers, and businesses owned by people with disabilities are charged at a rate of 1/2 of 1% (.005). The State allows businesses to pass on their 4% tax-inclusive tax burden to their consumers by charging their customers a quasi sales tax rate of 4.166%. The GET generates nearly half of the State's tax revenue and is the primary method by which the State generates tax revenue from the strong tourist economy. Despite its "success", there are several criticisms of the General Excise Tax. The GET is charged on business income from all sources including the sale of basic necessities such as food and doctor's fees and therefore serves as a sales tax on items most states exempt from sales tax. The total tax burden on each item sold is more than the 4.166% charged at the register since GET was charged earlier up the production chain (such as manufacturers and wholesalers), making the GET less transparent than a retail sales tax.
• Illinois
  Illinois
  Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
  
   - Illinois policy makers are considering a 1% gross receipts tax to increase the foundation level for Illinois public schools, as well as to fund a host of educational accountability initiatives. The tax is expected to generate enough revenue to replace the state share of the retail sales tax, corporate franchise taxes, and corporate income taxes. Proponents claim that it is simple for both the government and business to administer, easy for the public to understand, broad-based, stable, and progressive. An editorial article in the Chicago Tribune called it "the best idea" for education funding reform, but some statewide business leaders have rushed to condemn it.
• Mississippi
  Mississippi
  Mississippi is a U.S. state located in the Southern United States. Jackson is the state capital and largest city. The name of the state derives from the Mississippi River, which flows along its western boundary, whose name comes from the Ojibwe word misi-ziibi...
  
   - A 3.5% contractor's tax is levied on all commercial and non-residential construction and is calculated upon the total contract amount.
• New Mexico
  New Mexico
  New Mexico is a state located in the southwest and western regions of the United States. New Mexico is also usually considered one of the Mountain States. With a population density of 16 per square mile, New Mexico is the sixth-most sparsely inhabited U.S...
  
   - The gross receipts tax rate varies throughout the state from 5.125% to 7.875%.
• Ohio
  Ohio
  Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
  
   - Commercial Activity Tax (CAT)http://tax.ohio.gov/divisions/commercial_activities/index.stm
• Pennsylvania
  Pennsylvania
  The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
  
   - Either 5% or 5.9% for most applicable industries. Tax stands at 1% for private bankers, and the tax on natural gas
  Natural gas
  Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
  
   was repealed during the industry's deregulation.
• Washington - Business and Occupation Tax
  Business and occupation tax
  The business and occupation tax is a type of tax levied by the U.S. states of Washington and West Virginia, and by municipal governments in West Virginia...
  
   (B&O)
• West Virginia
  West Virginia
  West Virginia is a state in the Appalachian and Southeastern regions of the United States, bordered by Virginia to the southeast, Kentucky to the southwest, Ohio to the northwest, Pennsylvania to the northeast and Maryland to the east...
  
  – Business and Occupation Tax; only applies at the state level to utilities, but is used by the great majority of cities in the state.