Using a population-weighted average of local sales taxes, the Tax Foundation report details the combined state and local sales tax rates for each state and explains how sales taxes fit into a state’s overall tax structure.
by Staff
March 18, 2014
Photo credit: Tax Foundation
2 min to read
Tax Foundation
The nonpartisan Tax Foundation has released an updated report of U.S. sales taxes for 2014. Using a population-weighted average of local sales taxes, the report details the combined state and local sales tax rates for each state and explains how sales taxes fit into a state’s overall tax structure, says the Tax Foundation.
Additionally, the report details the recent changes that have taken place in states’ treatments of sales taxes.
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The report’s key findings include:
45 states collect statewide sales taxes.
38 states collect local sales taxes.
The five states with the highest average combined state-local sales tax rates are Tennessee (9.45%), Arkansas (9.19%), Louisiana (8.89%), Washington (8.88% ) and Oklahoma (8.72%).
Virginia, Arkansas, Ohio and Maine have recently raised sales tax rates.
Arizona, Kansas and the District of Columbia have recently cut sales tax rates.
Sales tax rates differ by states, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy.
Differences in sales tax rates cause consumers to shop across borders or buy products online.
“Sales taxes are some of the most easily understood taxes because every time a consumer makes a purchase, they can see the rate on the receipt,” says Scott Drenkard, the Tax Foundation’s economist.
The study addresses the fact that 38 states allow local governments to levy sales taxes within their jurisdiction. When combined with the statewide rates, these local rates can result in substantially larger tax bites, says the Tax Foundation.
“Of course, sales taxes are just one part of an overall tax structure and should be considered in context,” says Drenkard. “For example, Washington state has high sales taxes but no income tax; Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers' control that can have immediate impacts.”
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