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Arizona Sales Tax Could Rise From 9th Highest to 3rd Highest

1 min readBy: Joseph Bishop-Henchman

The Arizona Republic discusses that state’s May 18 vote to raise its state sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. from 5.6% to 6.6%. The article correctly notes that Arizona’s overall state-local taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. burden and income tax rate are among the lowest in the country but also states:

Twenty-six states have a higher state sales-tax rate than Arizona’s, although if the sales-tax hike passed, only eight states would have a higher rate.

This is true, but doesn’t give the whole picture because it is only state sales taxes. Some states don’t have local sales taxes, so comparing apples to apples means looking at combined state and local sales taxes. There, Arizona’s combined 7.92% sales tax is the 9th highest now, and if the rate goes up a point, it will become the 3rd highest. That’d be behind only Tennessee, which has no wage tax, and California, not a state to emulate for fiscal policy.

And although is true that Arizona is a relatively low-tax state, they are middle-of-the-road on business tax climate.

More on Arizona here.