Those locales have the highest sales tax rates in the United States.
The one thing that unites most Americans is our opposition to paying the IRS. But for some reason we tend to forget our local taxes. Maybe it's because there are so many state and local levies that we've just become oblivious to them.
And the one that is collected most across the country is the sales tax.
But in Alaska, local jurisdictions can levy a sales tax if they wish; at last count, 62 municipalities do, with rates ranging between 1 percent and 7 percent. Thirty-three states join Alaska in letting localities charge a local option sales tax on top of the state tax rate.
The folks at the Tax Foundation, a Washington, D.C., nonprofit that's been examining tax policy since 1937, have done some number crunching on the various sales taxes assessed in the states and the District of Columbia.
Tennessee's 9.44 percent combined state and average local sales tax rate is the highest in the country. Residents of Birmingham and Montgomery are tied for the highest combined state, county and city sales tax rates among major metropolitan areas at 10 percent.
No wonder both states had recent sales tax holidays!
"General sales tax rates levied by state, county and city governments in the United States vary greatly," notes Tax Foundation adjunct scholar Lawrence Summers (no, he's not the Larry Summers who's in the Obama administration). The Foundation's Summers wrote the report that examined combined state, county and city sales tax rates in cities with populations greater than 200,000. FYI, there are 107 such jurisdictions.
"Even within a state, it can be difficult to know what the average sales tax rate is when there can be hundreds of different jurisdictions charging different rates," says Kail Padgitt, the Tax Foundation economist who looked more closely at local option sales tax rates.
After Tennessee, the states with the highest combined state and average local option sales tax rate are California at 9.08 percent; Arizona at 9.01 percent; Louisiana at 8.69 percent; Washington at 8.61 percent; New York at 8.52 percent; Oklahoma at 8.33 percent; Illinois at 8.22 percent; Arkansas at 8.10 percent; and Alabama at 8.03 percent.
Joining Birmingham, Ala., and Montgomery, Ala., with their 10 percent combined sales tax rate each, on the heavily sales taxed resident list are the California cities of Long Beach, Los Angeles, Oakland, and Fremont, which each have a combined sales tax rate of 9.75 percent. That's also the combined rate assessed in Chicago.
So if sales taxes matter to you, where do you want to live? In addition to the five no-sales-tax states, the lowest levies on purchases are in Hawaii (4.35 percent), Maine (5 percent), Virginia (5 percent), Wyoming (5.17 percent) and South Dakota (5.22 percent).
And remember, if you get a job in one of these low-sales-tax states, you can deduct your move on your federal tax return!