 Sales and income taxes behave differently due to differing definitions of tax base , which can make comparisons between the two confusing . Under the existing individual income plus employment ( Social Security ; Medicare ; Medicaid ) tax formula , taxes to be paid are included in the base on which the tax rate is imposed ( known as tax @-@ inclusive ) . If an individual 's gross income is $ 100 and the sum of their income plus employment tax rate is 23 % , taxes owed equals $ 23 . Traditional state sales taxes are imposed on a tax base equal to the pre @-@ tax portion of a good 's price ( known as tax @-@ exclusive ) . A good priced at $ 77 with a 30 % sales tax rate yields $ 23 in taxes owed . To adjust an inclusive rate to an exclusive rate , divide the given rate by one minus that rate ( i.e. <formula> ) . 
