It is often said about American life that the only things certain are death and taxes. For most Americans, that is true. A few people, most of whom are rich, have structured their incomes and assets to dodge payment, usually legally.
Tax authorities come at Americans through several entrances. The largest by far is the one taken by the Internal Revenue Service. America runs on individual and corporate taxes. Many states have income taxes. A few, like Florida, do not, and that has made them havens for the rich. The rich often do end up paying a large tax at the end of their lives through inheritance taxes at the federal and state level. In most states, there are local taxes as well. Usually, these are in the form of property taxes and they support initiatives like schools.
The one tax people cannot avoid is the sales tax, which is in effect in most states. Whether people buy a bar of soap or a car, a percentage of the total sum goes to sales taxes.
To determine the states with the highest sales tax rate, 24/7 Wall St. reviewed data on sales tax rates from the Tax Foundation. States were ranked based on the combined state and local tax rates as of January 1, 2022. The local tax rate is the average of all local sales tax rates within a state. All other data is from the Tax Foundation and is for fiscal 2019.
Unlike income and corporate incomes, which are taxed on a sliding scale, sales are taxed at a flat rate. Sales taxes are therefore considered a regressive levy that places a higher burden on lower-income people. Critics of sales taxes say lower-income people pay a higher share of their earnings for necessities than higher-income people. Proponents of the sales tax say it is a consumption levy that is fair and simple.
In some states, Americans pay up to 9.5% in combined state and average local sales tax. Four out of five states with the highest combined state and average local sales tax rates (9.2% and above) are in the South: Alabama, Arkansas, Tennessee and Louisiana. The fifth state, Washington, is one of eight states that does not have a state income tax.
Hawaii has the highest state and local general sales tax collection at $2,888 per capita. California has the highest state sales tax rate at 7.3%.
The state with the highest sales tax rate is Louisiana:
- Combined state and average local sales tax rate: 9.5%
- State sales tax rate: 4.5% (13th lowest)
- Average local sales tax rate: 5.1% (second highest)
- State and local general sales tax collection: $1,762 per capita (fifth highest)
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