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Foreword
Retail sales 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. es will bring the states and localities over $15 billion in 1970. This is an impressive slim Under any circumstances; in the context of today’s state and local financial pressures it is vital. For as the new decade begins, the means by which state and local governments will finance a wide range of domestic programs remains a matter o f considerable public discussion.
The purpose of this study is to examine the present and prospective role of the retail 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. in state and local tax structures. It analyzes the characteristics of the various levies referred to as “retail” sales taxes, suggests the reasons for their wide use and rapid revenue growth, and points tip the major issues relating to their operation.
Robert Norton, Research Assistant, was primarily responsible for this study, under the general supervision of Elsie M. Watters, Director of State-Local Research. The study is based on portions of an earlier Tax Foundation work, Retail Sales and Individual Income TaxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. es in State Tax Structures, directed by C. Lowell Harriss, the Foundation’s Economic Consultant, and published in early 1962.
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