Sales Tax
A sales tax is a tax that is imposed on a consumer for the purchase of goods, often with certain exceptions, such as basic food items and medicines. As such, the tax is a consumption tax. The exceptions allow the less wealthy consumer to buy necessary items and prevent the unfairness and hardship that could result from the imposition of a tax that is not income-based. The same rate of tax applies to all consumers, regardless of income. It is collected by the seller at the point of purchase and transferred by him to the state tax authority. Re-sellers who do not utilize the goods are not required to pay a sales tax.
Most states in the United States, with few exceptions, impose sales tax. Residents of a state that imposes a sales tax who purchase goods in an exempt state may be subject to a “use tax” by their non-exempt state of residence. For instance, a resident of New York who purchases goods in Hawaii, a sales tax-exempt state, for use in New York may be required to pay a use tax to New York State, at the same rate as the New York sales tax.
Proposals have been submitted to replace the entire Federal income tax system with a national retail sales tax. According to these proposals, all Federal income and payroll taxes, as well as estate tax, capital gains tax, Social Security, gift tax, among others, would be abolished, in an attempt to establish a more equitable system. Furthermore, they seek repeal of the Sixteenth Amendment to the US Constitution which authorizes Congress to levy taxes. The Individuals below the poverty level would not be subject to tax. Proponents of the legislation claim that it would be revenue neutral, that is, not increase or decrease tax revenues.
Sales tax is considered to be the ‘fairest’ of taxes as it has a high rate of compliance and is hard to avoid. Sales tax is ideally charged only once on any goods or services and is easy to calculate and collect.
For more infomation on taxes choose from the list below. |
|
|
|
|
|
|
|
|
|
Banking - Business Finances - Economics - Insurance - Investing
Major Purchases - Personal Finances - Stock Market - Taxes
|
