Retail sales taxes are one of the more transparent ways to collect tax revenue. While graduated income tax rates and brackets are complex and confusing to many taxpayers, the sales tax is easier to understand: people can reach into their pocket and see the rate printed on a receipt.
Less known, however, are the local sales taxes collected in 38 states. These rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state-local rate compared to other states. In this episode, economist Scott Drenkard discusses his latest report on state and local sales tax rates and how they affect consumers, and offers advice for states moving forward with sales tax reform efforts.
Tax Foundation Fiscal Fact No. 392, "State and Local Sales Tax Rates Midyear 2013."