And the burden of those taxes, specifically the ones tacked on to our purchases, is increasing, according to a recent study.
Thomson Reuters’s latest ONESOURCE Indirect Tax rate report found that the number of increases in state, county, city and transit sales taxes went from 69 in 2012’s third quarter to 129 in the same time frame this year.
“The burden for U.S. taxpayers continues to increase, with both an increase in sales tax rates and in the number of tax law changes,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters, in a statement announcing the findings. “New or increased tax rates have an obvious impact on the consumer, but the impact these changes have on businesses is often overlooked. Regardless of whether there is a tax increase, decrease or a new tax all together, each change represents a significant operational burden for businesses that are chartered with collecting sales tax on behalf of government.”
On average in the United States, the report found that the city sales tax rate increased this year to 1.75 percent from 1.68 percent. The average county sales tax rate rose to 1.245 percent from 1.15 percent. The state average sales tax rate increased to 5.615 percent from 5.48 percent.
Overall, says the report, the combined average sales tax rate paid by U.S. consumers was 8.61 percent in the third quarter of this year. Just something to think about as the holiday shopping season is about to begin.
The states with the highest sales tax rate of 7 percent were Indiana, Mississippi, New Jersey, Rhode Island and Tennessee. Minnesota came in second, by the Thomson Reuters count, with its state sales tax rate of 6.875 percent.
At the county level, the highest sales tax rate was found in Wrangell, Alaska, at 7 percent, according to the report. Alaska also is home to the city with the highest sales tax rate; Kodiak collects a 7 percent city sales tax.
Remember that Alaska doesn’t have an income tax. As someone who lives in Texas, another state with no income tax, I can attest that officials at all levels of Lone Star State government rely heavily on sales tax revenue. Based on this report’s findings, it looks like that trend will continue.
Have you seen state and local taxes increase where you live? If so, how have the higher taxes affected you?
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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”