Sales Tax

Taxing sales and services (as opposed to taxing income) is seen as a simpler way of collecting tax at the point of sale. People can avoid paying income tax by not declaring cash income or using unfair loopholes, but as long as the seller/service provider is not running a cash business off the books, the purchaser cannot easily avoid paying sales tax.

Sales tax is a flat tax, not a progressive tax, so it is more burdensome to poor and middle income individuals than to wealthier individuals. In most states sales tax is not charged for many essential items such as food and medical services. In the U.S. three states have no state sales tax, Montana, New Hampshire and Oregon. California has the highest rate of 7.5%. The lowest state tax is 4%, but local taxes of 2-4% are often applied in addition to state taxes.

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