Pollock, Stephen H.
September 1991
National Tax Journal;Sep91, Vol. 44 Issue 3, p297
Academic Journal
This article discusses the two main sources of exporting of the sales tax in the absence of federal deductibility in the U.S. The first is out-of-sate residents purchasing taxable goods and services while visiting Connecticut. These direct purchases are part of the non-business component of the sales tax paid. The other source of exporting derives from taxable purchases by businesses. Different assumptions may be made about how businesses shift the tax. If it is assumed that the tax paid by businesses operating in in-state markets is shifted forward to customers in the form of higher prices, the tax will be borne by Connecticut residents to the extent that they are the purchasers of the goods and services of Connecticut businesses. However, many business sales are either to out-of-state consumers or are sales to other Connecticut businesses, which may in turn sell to out-of-state customers. Thus, a portion of the tax paid by Connecticut businesses will be borne by residents, and a portion exported.


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