Private Contractors to the Government

[SHRED]

We have a "Business Park" in the city I work for, as do lots of cities.
A good portion of the General Fund of the city is derived from sales tax especially bigger ticket items like auto sales.
The Business Park has lots of defense/military contractors in it. The problem is that since they produce no taxable product therefore no revenues for the local General Fund.

I have a hard time understanding tax rules here. Seems to me that when a private contractor makes a widget (circuit-board), or high dollar item (drone) to sell to the Federal government there should be a tax kick at least at the local levels (city or county)?

I mean come on...there are CEO's of these corporations pulling down HUGE bucks (our tax dollars) and their product sales do not even benefit the city in which the company resides. I don't like that picture at all.



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[Bonhomme Richard]

1. The sales tax that contractors would charge are just going....

to be paid by the taxpayer.

[RC]

2. It is not that simple.

That is like saying public employees should not be paid because that money is being paid by tax payers.

That tax money paid by government contractors would flow through the local economy, increasing revenue for proper street maintenance, for one. Water, sewer, etc. It costs the city or local municipality to have businesses located there. All businesses need to pay taxes to help maintain the local governments needed to maintain order.

[Jackpine Radical]

3. To the extent that federal money comes from the income tax,

when it is used to relieve property or sales tax burdens, it amounts to the substitution of progressive taxes for regressive ones. That is a good thing, and would be even better if our income taxes were more progressive.

[hughee99]

4. The city they are located in isn't populated with people

who work for those corporations? The kind of people who pay local taxes and spend their income on other local business?

[hack89]

5. The Federal Government has given itself immunity from state and local taxation.

remember that the buyer pays the sales tax.

Corporations do pay sales taxes on material they purchase to build things for the government.