Feasibility of a Meter to Capture Business Income

Pursuant to a congressional request, GAO analyzed the potential revenue, costs, and feasibility of using business income meters to capture business income for tax purposes. GAO noted that: (1) the proposal lacks many details and relies on untested and relatively optimistic assumptions; (2) the assumptions include government support and tax integration at all levels, sustained customer participation in a nationwide lottery, noncompliant businesses' inability to avoid issuing receipts, the feasibility and effect of large, publicized fines, federal approval of a national lottery, and the proposal's ability to improve an already high tax compliance rate; (3) expected costs cannot be estimated because of unmeasured factors such as the size of the tax credit, technical enhancements to ensure the systems' integrity, lottery management and lottery prize costs, and needed government resources; (4) the proposal requires the creation of vast systems for administering the lottery, the meters, and other features; and (5) federal, state, and business officials do not support the proposal.