August 20, 2014

The Motley Fool: The 5 States with the Highest Sales Tax

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By Jeremy Bowman:

Nearly every state in the union charges a sales tax, and the tax levied on goods and services sold at the retail level is just one of many tools states use to collect revenue, along with licensing and taxes on income, corporations, and property. Sales taxes tend to attract less attention than income taxes, though general sales taxes and gross receipts taxes, which are charged to businesses for transactions, contribute nearly as much revenue as state income taxes. In 2013, states collected $254.7 billion in sales and gross receipts taxes — about $806 per American — versus $980 per person in state income taxes.

Washingtonians’ average state and local tax burden is just below the national median at 9.4%. However, the state’s tax structure was ranked as the most regressive by the Institute on Taxation and Economic Policy, which said that the poorest 20% of Washingtonians pay an average of 16.9% of their income in state taxes, compared to a rate of just 2.8% for the top 1%.

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