Chapter 2, Problem 2IRP

Identify the tax issue or issues suggested by the following situations, and state each issue in the form of a question.

County M imposes a 1 percent tax on the gross receipts earned by firms operating within its jurisdiction. For the past year, gross receipts subject to tax totaled $400 million. The county government is considering raising the tax rate to 2 percent because it needs $400,000 additional revenue to improve its road system.