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The Pain of Sales Tax

By Taxes FOXBusiness

If it seems you’re paying more each year in sales taxes, it may not be your imagination.

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Forty-five states and the District of Columbia collect statewide sales taxes, while local sales taxes are collected in 38 states. And, in some cities the one two punch can be exorbitant. In Chicago, for example, the combined effect of local and state sales taxes is a whopping 9.25% take by governments.

The five states with the highest average combined state and local sales taxes are:

Tennessee  9.46%
Arkansas     9.27%
Louisiana    9.01 %
Alabama     8.93%  

The numbers are calculated as a population-weighted average. Dig into a specific city, however, and you may find even higher taxes. In Birmingham, AL, for example, residents pay a state sales tax of 4%, a city sales tax of 4% plus a county tax rate of 2%. That’s a total sales tax of 10%.

The Tax Foundation’s Scott Drenkard said collections can be very different in various parts of a state. For example, the state of Illinois doesn’t collect sales tax on a bottle of Tylenol, but local governments might. Likewise, if you bought a banana, you might pay no sales tax at all, but if you bought a candy bar, you’d be taxed. This lack of uniformity creates headaches for retailers who are subject to serious penalties if they fail to collect taxes when due.

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The overall lowest taxes are collected in Alaska, where sales tax rates are just 1.78%
   

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