Quote:
Originally Posted by Prudence
Of course, if the producers pay his taxes, wouldn't he then have to pay taxes on that payment, too?
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Yes, but then they just pay more recursively until it works out to the appropriate amount. This is the way sales tax works in Hawai'i. Hawai'i's sales tax is actually an exise tax (a tax on business income) that business just pass directly to the consumer (and ends up looking like a sales tax). So they tack on 4%, which is then a 4% increase in business income, so that 4% is taxed at 4%, which is passed on to the consumer and becomes income which is taxed at 4% and so on until 4% is a very small amount.
The sales tax is itself taxed. So the 4% (when I was there) exise tax is really something like 4.17% when it gets added to a purchase price.