What is Sales Tax?
Sales tax is a consumption tax levied on goods and services purchased at the retail level, paid by the consumer and submitted by the retailer to the governing tax authority.
How Does Sales Tax Work?
In the United States, the sales tax is imposed on retail items. It is paid by the consumer to the retailer, usually as a percentage of the retail cost, who submits the payment to the state.
Sales tax rate and application varies dependant on the state. Sales tax can be applied by counties, cities and regions in addition to the state sales tax.
Why Does Sales Tax Matter?
The imposition of this tax affects the consumer directly on each purchase for nonexempt goods and services. Some consumers may find it advantageous to "cross the border" to pay less taxes than in their home state for larger purchases.
The Organization for Economic Cooperation and Development (OECD) has found that sales taxes are one of the least harmful types of taxes for the economy; they minimally hinder growth and investment.
Many consider sales tax to be regressive, as it is a larger burden and percentage of income for low-income earners.
The only federal sales tax was imposed in 2010 via the health care reform law which taxes a 10% federal sales tax on indoor tanning services.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
When the markets are up, everyone is excited about investing. When they are down, not so much. As a seasoned investor (I’m talking decades) and student of...Read More →
Looking to get a little more bang for your saved buck? Depositing your hard-earned dollars in an online bank might be worth a long look if you're seeking higher yields. Today, many of the...Read More →
Everyone understands a higher interest rate on a mortgage means you'll pay more...Read More →
Buying a second home before selling the first is a scary proposition. But some move-up buyers living in tight real estate markets have little choice if they want to...Read More →