Sales Tax Rates Will Vary
The rate of 7.25% seems stuck in my head as reasonable. But recent receipts in the city show a rate of 8.241% on non-food purchases. Yikes! Last month I brought stuff at the Ikea store in the Chicago suburb of Bolingbrook which had a rate of 8.5%. Food purchases have a rate of 5.1409%. I forget how that came to be — I think it was the elimination (or reduction) of the state portion? Most of my purchases during the last year have been food and books for school. But boy those 1/8th of a cent tax increases add up.
We tax ourselves in order to provide services. These can be everything from public schools to police/fire/ems to public libraries, transit, street lighting, parks and on and on. Taxes come in many forms depending upon the jurisdiction where you live.
A decade ago I had my luggage stolen from my car the day I was traveling to Seattle. I arrived in Seattle with the clothes on my back and a magazine purchased in the Minneapolis airport. The next morning we were driving from Seattle to visit Portland, OR. Oregon has no sales tax so as I bought clothes (& luggage) to replace those that were stolen the savings added up. That $24.99 shirt was just $24.99. That same shirt bought today in St. Louis would cost another $2.50.
As a tourist enjoying tax-free purchases I likely paid more for some items because other taxes, such as property taxes, are often reflected in the final price of the goods & services.The renter doesn’t escape property taxes — part of the rental rate is there to cover those taxes. The issue of evaluating tax levels from city to city within the same region and state is complicated enough but comparing region to region gets even more complex. I’m sure somewhere out there I could find a study to show what a family might pay in various taxes in the St. Louis region vs. Dallas vs. San Diego and so on.
Sales taxes just happen to be one we see regularly. We have the option to order online and potentially avoid paying sales taxes (although not necessarily). If our online purchases exceed I believe $2,000 annually in Missouri we are supposed to pay use tax on those purchases. My online purchases never come close to approaching that amount.
But then we go back to figuring in services relative to taxes paid. Some places have lower tax rates but they also have a reduced level of services. Thus it comes back to the question if you are pleased with the level of services provided by your government based on your total annual tax bill? As consumers cut back on spending and shift more purchases away from retailers in their communities to online stores local & state government budgets are going to feel the pinch. With less money that means less services.
Share your views below on taxes.
I was just thinking about sales tax especially on cars. I wish they would get ride of that. It’s hard enough for people to have a huge down payment. I always look forward to tax free weekend in August. I have heard they are thinking about putting a halt to sales tax on cars as part of the stimulus package. I a tax free month or at least a week would be a good idea.
ron paul
http://en.wikipedia.org/wiki/Political_positions_of_Ron_Paul
go to economy section
One fundamental, basic concept we need to accept is that government needs taxes (or “fees”) to provide the services their constituents demand. Some entities can’t/don’t impose sales taxes. Some entities can’t/don’t impose income taxes. Some entities impose impact fees on new construction. Many entities try to minimize property taxes, especially on residential properties. Some entities use fees charged for trash collection and/or utilities as profit centers, to make up for revenue “shortfalls” from other sources. But every governmental entity will continue to impose some combination of taxes and fees to fund their annual budgets. And yes, we each have our own opinions about what constitutes “need” and what constitutes “waste”, but, by definition, “government” is all about wealth redistribution – there will never be true “fairness”.
.
The other basic concept that we need to accept is that people don’t like to pay taxes, so our politicians are continually trying tweak their revenue sources to either obscure their overall impacts or to impose taxes on non-residents who are, by definition, non-constituents, as in “just shut up and pay!” Our local reliance on sales taxes illustrates this perfectly. It’s hard not to build a new shopping center and not see an immediate increase in tax collections – it’s pretty alluring to any politician, especially since a large number of the taxpayers will be non-residents/non-constituents. The other advantage of a sales tax, compared to a property tax or an income tax is that it’s pretty insidious – you don’t have to total it up every year and see just how much you’re actually paying. The only time it really seems huge is when you make a major purchase, like a motor vehicle. We’ve just become conditioned to another 5%-10% being tacked onto every receipt, and that extra $20 or $50 a week doesn’t register as another $1000 or $2500 a year in taxes.
.
While it seems like free money to get funding from somewhere or someone else, as consumers of government services, ultimately, we each should either be willing to pay for our fair share OR we should be willing to receive fewer services from fewer government employees receiving lower wages. The real downside to an increasing reliance on local sales taxes, besides their obvious unpredictability, is with local residents are contributing relatively little to the overall tax stream, they tend to become less involved politically and are less likely to hold their elected officials accountable for their fiscal choices. When your property taxes go up, government hears about it. When the sales tax goes up by ½% or 1%, it rarely causes much discussion, especially if it’s wrapped in the cloak of an “improvement districtâ€.
.
I’m not sure we want to become New Jersey, where property taxes are probably triple what we pay here (and are higher than my brother’s actual mortgage payment), or Florida, where residential property taxes vary widely on comparable properties, but relying on ever-increasing sales taxes here is creating a situation where taxation without representation is becoming the norm, not the exception!
From the Governing.com website, 13th Floor blog:
.
Cities and Counties: “It’s bad and getting worse”, posted by Zach Patton
.
“The next two years will be particularly gruesome for counties and cities,” said Larry Naake, execitive director of the National Association of Counties. Looking at estimated revenues for upcoming cycles, Naake said, “In 2009, it’s bad. In 2010, it’s horrible.”
.
The three sources of state and local revenue — property, sales, and income taxes — are all down. According to Chris Hoene, the director of policy and research for the National League of Cities, this is the first time all three of those have faced declines in the 25 years that NLC has been surveying local fiscal officers.
.
So how will cities and counties cope? Cuts, and lots of ’em. Unsurprisingly, most localities are planning to delay infrastructure projects and reduce spending in areas like public safety and health services. They’re also planning cuts in personnel spending. According to a recent NACo survey of large urban counties, 91 percent plan to cut spending, and a similar number are planning hiring freezes. But most surprisingly, a full 64 percent are planning actual layoffs.
.
In addition to those spending cuts, Naake and Hoene said localities will likely step up their efforts to consolidate — not in terms of full metropolitan consolidation of government, but along the lines of “functional consolidation” of particular services. Cities and counties can increase efficiency by having one agency providing a service — such as animal control, garbage and recycling pickups, parks and recreation maintenace, or the court system — to the county and to all cities within that county. It’s a trend that’s picked up over the past decade, said Naake. “But I think you’re going to see a lot more cities and counties turning to that as times get tougher.”
One resource: http://www.wheretoretire.com/reports.cfm
I think most everyone would agree that the majority of people don’t have a problem with paying a tax. The problem comes up when that tax money DOESN’T GO WHERE IT’S SUPPOSED TO GO!!
We are overtaxed. I don’t understand it well enough I suppose, but it just seems wrong that I buy a car, and I pay the tax. Then, every frickin’ year, I pay property tax on that car, just for having it. I’ve already given the govt their money for my car purchase! Why do they get to cash in on my purchase EVERY YEAR!?!?
.
Every little thing we buy is taxed.
.
Every penny we earn is taxed.
.
I’m sick of it.
I rather like the experience shopping in the EU where taxes are built into the cost of the goods on the shelf. If the sticker says €1.28 it is really €1.28 at the register. Some people have told me that breaking them out in the way done here in the US allows people to see the amount of taxes they are charged. Of course you don’t see the tax amount until after you are halfway through your exercise at the register. Plus, you have little visibility into which items are taxed. [Some states charge sales tax on bread, milk and water while others don’t.] I find that taxes are hidden in both circumstances.
I’d rather have the taxes rolled into the total price and let me decide based on that. To Steve’s point, even states where there is no sales tax they will tax everyone somehow. It will filter down to prices for goods and services one way or another. Are we taxed too much? I couldn’t say really. It depends on what you want from the government and the current rate doesn’t bother me too much. I would just like to make the whole exercise a little more honest. As a previous poster said above: I get taxed all the time. My income is taxed, my (one) car is taxed at purchase and every year for some reason, the stuff I buy at the store is taxed at sale and then the company is taxed on that profit and the land the store sits on is taxed.
In general I believe sales taxes to be the most fair of all taxes. The poor have less to spend and will then get taxed less. It is easy to decide which basics (food, shelter, public transportation) not to tax to lessen the tax burden on the less fortunate. The “Fair Tax” is an interesting proposal which I think is a better system than our current income tax system which is confusing at best and an intrusion of the government. Income tax was supposed to pay for WWI and be a short term solution. Everything should be a sales/transfer tax and be done with it all. No payroll tax as a disincentive to business to hire. No taxes on the money used to pay for mortgages, medical, schooling and child care costs!
Yeah, the tax rate would be 25% or something but it’d be an honest tax we could then discuss instead of the confusing system of loopholes we have now.
@equals42: I agree on the concept of the VAT; when I lived in Europe I preferred that concept. It’s also easy enough to find out the tax rates for good, as that shows up on the receipts (at least it did in Ireland, Britain, France and Italy).
I’m a little confused about your assertion that sales taxes are the fairest because the poor, who have less money, will pay less. Perhaps the magnitude of their taxes will be a smaller number, but as a percentage of their total income, they will pay a far greater share than a middle-class or wealthier person. Food needs don’t change just because you’re poor–everybody needs roughly the same amount of nutrition; everybody needs toiletries, clothing, transportation, etc. These are some of the simple, basic needs in an urban society. If the poor had the money they currently spend in sales taxes, don’t you think they would spend it? That would boost the economy. Even if they didn’t spend it, and saved it, it would still be a long-term boon to the economy.
Also, wouldn’t a fair tax of 25% across the board would actually be a tax DECREASE for most people in the US? The most common tax rate is already 28%, with the next higher tier in the 34% range.
After income taxes, social security, medicare, insurance, and 17% 401k contribution, nearly half of my paycheck is gone by the time I get it. Then I have to pay taxes when I buy things, pay real & personal property tax on my home and car, pay all kinds of confusing taxes and fees on services like phone, water, etc (some of which are more than 50% fee), pay a “september 11th fee” when flying. If I invest money and it actually goes up (ha!), more taxes.
It sucks and getting constantly hit with fees and taxes everywhere you turn is really depressing. Of course it is necessary, and the St Louis County property tax bill actually shows a breakdown of where your tax dollar goes (most of it is to schools). Like the other poster above said, It isn’t so much the taxes as it is the perceived mis-use of them. And seeing the Wal-Marts and Cardinals of the world always getting tax breaks when the normal residents get nothing, that’s also discouraging.
I’m conflicted because on the one hand I think the haves should help the have-nots, and things like roads and public schools will help the community as a whole, even if I don’t drive or have children. On the other hand, there is so much waste and abuse it is hard to even comprehend how it could ever be controlled.
The historical and current individual effective federal tax rate is in the teens. [I had the number but rebooted.] Add in state and local income taxes and then sales tax again. The actual fair rate is debatable. In regard to sales tax on the poor, the Fair Tax allows for this by sending everyone a check equivalent to the sales tax somewhat at the poverty line would have incurred. The poor would actually get more back than they pay in sales tax in some cases.