Inclusive vs. Exclusive Taxation
$10 label price + $1 sales tax = $11 total price.
This is an example of Exclusive Taxing, which is how our current sales tax is tabulated.
$11 income – $1.10 income tax = $10 net earnings.
This is an example of Inclusive Taxing, which is how most of our current taxes–including income tax and Medicare/Social Security withholdings– are tabulated.
- Posted in: Economics