Taxing Taxes

December 20, 2010 at 1:55pm By: Mr. Wilson Posted in The Lincolnite Blog

I got a kick out of reading this article about the arena-related “occupational tax” and how it is applied before the sales tax, meaning that sales tax applies to the occupational tax as well as the original bill. In other words, the occupational tax is itself taxed.

Well, not according to the State. The Nebraska Department of Revenue falls all over itself trying to explain why one tax being applied to another tax is not, in fact, a tax on a tax. There may be a difference on paper, but the fact is few people care about that technicality. If two taxes show up on a receipt and one tax affects the other tax, that’s a tax tax in most folks’ minds. Period.

Which gets me wondering: will most places itemize the new tax on receipts? Can all modern POSs handle that sort of thing? I suppose they probably can, but I really have no idea. If the occupational tax were just wrapped into each item’s cost nobody would ever notice, just like we don’t notice that we already pay taxes on taxes—such as paying sales tax on things that have already had sales taxes applied on them at earlier stages in its lifecycle.

The DOR isn’t going to win this one. But their attempts sure are entertaining.

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Fletch December 20, 2010 at 4:31pm

I read that “explanation” article and just scratched my head. You can call it what you want to call it, but if I pay $10 for food, and the new occupation tax raises that to $10.20, and then you charge me sales tax, it’s a tax on a tax no matter what the state wants to name it. Why do they always see the need to play us for fools?

(Yes, true, in reading the LJS comments section, we have a community full of fools, but we’re not *all* idiots.)

Bob December 21, 2010 at 7:19am

You get taxed on what you earn.
You get taxed on what you spend.
Again and again.
Are you really surprised?

Fletch December 21, 2010 at 1:42pm

I’m not surprised at all. The only thing that amazes me is that although it is clearly a tax on a tax, that the DOR or whoever thinks that just by saying it’s not, that we’ll all believe it.

It’s as though we are all but mere Stormtroopers to their Ben Kenobi. A small wave of the hand, followed by, “this is not a tax on a tax.” At that point, we simply turn to each other and say, “this is not a tax on a tax. Move along.”

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