Question #1

This year, State A raised revenues by increasing its general sales tax rate from 5 percent to 6 percent. Because of the increase, the volume of taxable sales declined from $890 million to $759 million. In contrast, State Z raised revenues from its 5 percent sales tax by expanding the tax base to include certain retail services. The volume of services subject to tax was $145 million.

1. Compute the additional revenue raised by State A.
2. Compute the additional revenue raised by State Z.