Although non-profit organizations themselves are exempt from taxation, they do create significant tax revenue. State sales taxes would be paid primarily out of concession sales by these organizations. About three-fourths of the tax revenue paid originated from larger budget organizations. To evaluate organizations' economic impact, the report estimated the additional indirect spending caused by the initial spending of the state's arts and cultural organizations. These two figures, initial and resultant indirect spending, were then added together.
Economists argue that only income brought into a region has an economic impact.
The Additional Impact of Audience Spending One important element that was not measured in the survey is the related spending by cultural audiences associated with attending events, such as money spent on restaurants, hotels, transportation and parking. Obtaining this data would involve surveying the audiences of many organizations across Connecticut and is a costly process. When such audience spending estimates are available, however, researchers typically observe that this spending is generally in the same range as organizational spending. A recent study of cultural, sport and entertainment organizations in the Hartford area demonstrates this point. This estimate does not include the indirect spending made by the 25.5 percent of non-state admissions that would make the economic impact of audience spending significantly greater than its direct spending.