The May 15 editorial “Mr. Cuccinelli’s partial plan” summed up the objections to Virginia’s Business Professional Occupational License (BPOL) tax this way: “Businesses dislike that it’s imposed on gross receipts.” But it’s not just businesses that dislike these taxes.
Economists and tax experts across the political spectrum have long decried gross-receipts taxes, which operate like a sales tax levied at every transaction along a supply chain. This means they unfairly burden businesses that require more stages of production and their true tax burden gets baked into the price of raw goods as they move through intermediate businesses. This is a tax transparency issue.
Virginia is one of just five states with gross-receipts taxes. Michigan got rid of its tax last year, and Texas wants to cut its this year.
Scott W. Drenkard, Washington
The writer is an economist at the Tax Foundation.