Sales taxes paid by businesses are buried in production costs and therefore hidden
from consumers and policymakers. Final (tax included) prices are related to the
number of taxable transactions that the good has undergone and who bears the tax
as well as to resource costs. Thus the total sales tax embedded in final prices is
obscured. This study investigates the level and the incidence of sales taxes applied
to business transactions. An input-output model assuming a full pass forward of the
tax is employed. The embedded sales tax is more regressive than the direct share
paid by consumers and is found in most commodities including those exempted by
legislation.
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