A sales tax
is a tax levied on commercial
transactions, usually retail sales
. It is calculated by taking the sale
cost and adding a set percentage
to each transaction to be paid to the state
in tax. In many countries, such as Canada
and most European
countries, this tax is assessed by the national government
and usually referred to as the VAT
In the US, the sales tax is assessed by the individual states, or sometimes by smaller local jurisdictions. Alan Keyes, 2000 Republican presidential candidate, proposed replacing the national income tax with a national sales tax with exemptions for basic necessities such as food and clothing.
The sales tax is often criticised as being regressive, as poor people spend a larger portion of their income on taxable goods. The exepmtions for basic necessities such as groceries, drugs, and/or clothing found in many states are intended to counteract the regressive nature of the tax.
Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax.
Residents living on the borders of states can sometimes take advantage of different tax rates, such as in Vancouver, WA, a suburb of Portland, OR: Many residents live there to take advantage of no income tax and lower property taxes, then cross the river to Oregon to purchase goods without tax.
Sales Tax percentage rates for U.S. States:1
Illinois 6.25 (1% for food and drugs)
New Hampshire -
New Jersey 6
New Mexico 5
New York 4
North Carolina 4
North Dakota 5
Rhode Island 7
South Carolina 5
South Dakota 4
Virginia 4.5 (4% for food)
West Virginia 6
Dist. of Columbia 5.75