Sales Tax in the United States - Variation With States
Every state in the United States except for Oregon, Montana, Hawaii, Delaware, Alaska, New Hampshire, levies sales tax on its citizens for every purchase made by them.
The amount that is levied varies in accordance with the state.
Some states go in for local sales tax along with the state sales tax.
This addition of local sales tax to the state sales tax makes it extremely high in some states.
For example, the state of New York levies a state tax of 4 per cent, but in the in the city of New York due to the addition of local sales the figure shoots up to a whopping 8.
375 per cent.
The variation in the state tax levied on the citizens by the respective states is not only on account of the percentage but also on the commodities that are subject to tax.
Some states go in for tax on all commodities while some states prefer to exempt food items that are not prepared and medicines.
In the state of Pennsylvania foot wear and clothing are exempt from being taxed.
Once it was considered a better and fairer system to the system of state levied income tax, as people who belonged to the lesser economic class bought and paid in accordance to their affordability.
In other words they bought things which they could afford.
A majority of the states are charging both forms of sales tax along with the state imposed sales tax.
The state of Delaware has attempted in many occasions to pass legislation on sales tax, but was defeated due to state imposed income tax.
The problem that arises with the application of sales tax in the United States is that of deduction from the federal income tax.
Sales tax is legally allowed deduction from the federal income tax, but it can only be used by people who itemize it.
To itemize, your deductions must exceed the standard deductions, in any other case you are not allowed to itemize.
Therefore, unless you are house owner who is still paying interest for your house you will find it very hard to itemize.
Let us consider the case of a married couple whose standard deduction when filed jointly is $10,300.
Therefore, the itemized deduction of the couple must be higher than the standard deduction in order to claim the deductions.
In retrospect it is fair to claim that the tax system in the United States is not balanced.
What would be a fair solution to the dilemma of sales tax? Is elimination of sales tax the answer to the problem? It would also be better if there is some sort of credit for federal return that allows people to claim, irrespective of whether they itemize or not
The amount that is levied varies in accordance with the state.
Some states go in for local sales tax along with the state sales tax.
This addition of local sales tax to the state sales tax makes it extremely high in some states.
For example, the state of New York levies a state tax of 4 per cent, but in the in the city of New York due to the addition of local sales the figure shoots up to a whopping 8.
375 per cent.
The variation in the state tax levied on the citizens by the respective states is not only on account of the percentage but also on the commodities that are subject to tax.
Some states go in for tax on all commodities while some states prefer to exempt food items that are not prepared and medicines.
In the state of Pennsylvania foot wear and clothing are exempt from being taxed.
Once it was considered a better and fairer system to the system of state levied income tax, as people who belonged to the lesser economic class bought and paid in accordance to their affordability.
In other words they bought things which they could afford.
A majority of the states are charging both forms of sales tax along with the state imposed sales tax.
The state of Delaware has attempted in many occasions to pass legislation on sales tax, but was defeated due to state imposed income tax.
The problem that arises with the application of sales tax in the United States is that of deduction from the federal income tax.
Sales tax is legally allowed deduction from the federal income tax, but it can only be used by people who itemize it.
To itemize, your deductions must exceed the standard deductions, in any other case you are not allowed to itemize.
Therefore, unless you are house owner who is still paying interest for your house you will find it very hard to itemize.
Let us consider the case of a married couple whose standard deduction when filed jointly is $10,300.
Therefore, the itemized deduction of the couple must be higher than the standard deduction in order to claim the deductions.
In retrospect it is fair to claim that the tax system in the United States is not balanced.
What would be a fair solution to the dilemma of sales tax? Is elimination of sales tax the answer to the problem? It would also be better if there is some sort of credit for federal return that allows people to claim, irrespective of whether they itemize or not
Source...