New Data on State and Local Sales Taxes
February 7, 2011
Retail sales taxes are correctly described in textbooks as “transparent” taxes; citizens are aware of how much they pay and when. On any particular purchase, an individual can easily identify the amount and percentage he paid in sales tax; it’s right there on the receipt. As a result, even people with no interest in taxation have an idea of the general sales tax rate where they live.
However, in two-thirds of the country, local-option sales taxes make it somewhat more difficult for citizens to know what the rates are, and transparency suffers. Thirty-three states allow localities to charge a local sales tax. The rates vary from jurisdiction to jurisdiction, and a new Tax Foundation Fiscal Fact averages those in a way that gives an accurate impression of the sales tax in each state.
Tennessee, California, Arizona, Louisiana, and Washington have the highest combined state and average local sales tax rates. On the other end of the scale, Delaware, Montana, New Hampshire and Oregon all have the lowest combined rates of zero percent.