On or before April 15, millions of Americans will file their taxes.
Though the focus this time of year tends to be on income taxes, Americans also pay thousands of dollars each year in state and local sales taxes.
Sales tax rates and sales tax bases, which vary considerably between states, change how much tax revenue state and local governments collect. Generally, the states with the best economies have more affluent populations, and collect more taxes per capita as a result.
Americans pay between 0% and 11.6% of the price of the goods they buy in sales taxes — depending on state of purchase. Five states levy no sales tax whatsoever. On average, across all states, state and local general sales tax collections come to $1,145 per capita, compared to $1,518 in state and local property taxes per capita and $1,144 in state and local individual income taxes.
Many believe sales taxes do more harm than good because, unlike property taxes, income taxes, or corporate taxes, they are not taxed on a scale but as a flat percentage. This system is referred to as a regressive tax because its burden is higher on lower-income taxpayers.
Some tax policy experts, on the other hand, favor sales tax for its transparency. Regarding graduated income tax rates as complex and confusing to many taxpayers, sales tax proponents argue that sales taxes are easier to understand.
To determine the states with the highest and lowest sales taxes, 24/7 Wall St. reviewed sales tax rates from the Tax Foundation’s State and Local Sales Tax Rates in 2019 report.
The report used a population-weighted average of local sales taxes as of Jan. 1, 2019 to compare the average local rate of each state.
Combined sales tax figures include statewide sales tax rates as well as the average local sales tax rates for residents as of Jan. 1, 2019. Regional price parity data comes from the Bureau of Economic Analysis and is for 2016. Personal income per capita is also from the BEA and is for the third quarter of 2018. In New Jersey, the average local tax is -0.03% because businesses in Salem County are exempt from collecting state sales taxes.
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