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There are almost no forms of tax that are significant in size and based on gross revenues at the same time.

by szundi 3y ago

rdl 3y ago
Washington State has a B&O tax which, until recently, was the primary state tax. Hawaii has a ~4% gross receipts tax but it can be visibly passed on to customers like a sales tax.
pcthrowaway 3y ago
I realize this doesn't apply to Upwork, but don't the new U.S. tax laws discussed in https://news.ycombinator.com/item?id=35614313 https://news.ycombinator.com/item?id=35614313 prevent companies from writing off development costs, meaning they are taxed on the gross revenues (at least for that year)
- gamblor956 3y ago
  No, they have to capitalize (or amortize) development expenses over a 5 (domestic R&D) or 15 year (foreign R&D) period instead of getting to deduct them currently (meaning in the year incurred). Due to the way depreciation works, development is treated as incurred mid-year regardless of when in the taxpayer's tax year they are actually incurred, so the ultimate effect is that only 10% of the development costs can be deducted in the first year, 20% for the next 4 years, and 10% in the final year (6th calendar year after incurring cost, due to the deemed mid-year start in the first year).
gamblor956 3y ago
San Francisco has a gross revenue tax that is significant for tech companies. Hawaii also has a general excise tax based on gross retail and/or service revenues and is the state's primary tax on businesses (in lieu of income taxes). Ohio's commercial activity tax is based on gross revenue above a threshold. Oregon's corporate activity tax is based on gross revenue above a threshold. Washington's B&O tax is based on gross revenue and is the state's primary tax on businesses (in lieu of income taxes). France's social contribution tax is based on gross revenues above a threshold. And those are just the ones I know off the top of my head because I deal with them regularly.

There are almost no forms of tax that are significant in size and based on gross revenues at the same time.

by szundi 3y ago

There are almost no forms of tax that are significant in size and based on gross revenues at the same time.

rdl 3y ago

Washington State has a B&O tax which, until recently, was the primary state tax. Hawaii has a ~4% gross receipts tax but it can be visibly passed on to customers like a sales tax.

pcthrowaway 3y ago

I realize this doesn't apply to Upwork, but don't the new U.S. tax laws discussed in https://news.ycombinator.com/item?id=35614313 https://news.ycombinator.com/item?id=35614313 prevent companies from writing off development costs, meaning they are taxed on the gross revenues (at least for that year)

gamblor956 3y ago
No, they have to capitalize (or amortize) development expenses over a 5 (domestic R&D) or 15 year (foreign R&D) period instead of getting to deduct them currently (meaning in the year incurred). Due to the way depreciation works, development is treated as incurred mid-year regardless of when in the taxpayer's tax year they are actually incurred, so the ultimate effect is that only 10% of the development costs can be deducted in the first year, 20% for the next 4 years, and 10% in the final year (6th calendar year after incurring cost, due to the deemed mid-year start in the first year).

gamblor956 3y ago

San Francisco has a gross revenue tax that is significant for tech companies. Hawaii also has a general excise tax based on gross retail and/or service revenues and is the state's primary tax on businesses (in lieu of income taxes). Ohio's commercial activity tax is based on gross revenue above a threshold. Oregon's corporate activity tax is based on gross revenue above a threshold. Washington's B&O tax is based on gross revenue and is the state's primary tax on businesses (in lieu of income taxes). France's social contribution tax is based on gross revenues above a threshold. And those are just the ones I know off the top of my head because I deal with them regularly.