Monday, October 14, 2024
Hawai'i Free Press

Current Articles | Archives

Thursday, June 28, 2018
Hawaii 9th-Most Reliant on Sales Taxes
By Tax Foundation @ 9:30 AM :: 4231 Views :: Hawaii Statistics, Taxes

To What Extent Does Your State Rely on Sales Taxes?

by David Raymond and Katherine Loughead, Tax Foundation, June 27, 2018

Second only to property taxes and tied with individual income taxes, sales taxes are one of the largest sources of state and local tax revenue, accounting for 23.5 percent of total U.S. state and local tax collections in fiscal year 2015 (the latest data available; see Facts and Figures Table 8).

While most states levy a statewide sales tax and allow the collection of separate sales taxes at the local level, four states levy neither a state nor a local sales tax: Delaware, Montana, New Hampshire, and Oregon (see Facts and Figures Table 19). Meanwhile, eight states levy a sales tax at the state, but not the local, level: Connecticut, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, and Rhode Island. Alaska is the only state that collects local, but not state, sales taxes.

Today’s map highlights the extent to which sales taxes are responsible for tax revenue generation in each state. Washington – lacking both a corporate and an individual income tax but levying the harmful gross receipts tax on businesses – relies the most on sales tax revenue, which accounts for 45.9 percent of total tax collections. Tennessee, which does not tax wage income and is currently phasing out its tax on investment income, has the second highest reliance on sales taxes (40.7 percent of state and local tax collections). South Dakota is the third most reliant on sales tax revenue, with 40.5 percent of tax collections attributable to sales taxes. (South Dakota does not collect individual or corporate income taxes.)

To What Extent Does Your State Rely on Sales Taxes?

Sales tax reliance by states can be bounded by many factors. States that border low-sales tax or no-sales tax jurisdictions often struggle to levy high rates lest consumers shop across the border.

Another consideration is the tax base: the transactions that are subject to the sales tax. Public finance experts generally argue that a sales tax should apply to all final consumption, including goods and services. However, in practice, many states fall short of this ideal due to historical accident or willful exemption of certain classes of goods for political reasons.

One thing to look out for in the near future is how the application of the U.S. Supreme Court’s recent decision in South Dakota v. Wayfair will impact state reliance on sales taxes. The Court’s decision that states may subject online purchases to sales tax will have a broadening effect on state sales tax bases and could increase their attractiveness. Still, some significant base-narrowers exist in many states, as lawmakers continue to carve out exemptions for groceries, prescription medications, and other purchases. The best solution to maintain a sales tax that acts as a robust collector of funds for government services continues to be to tax all final consumption at one low rate.

---30---

Related: GE Tax: Audit Shows Tourists pay only 14.1% of Rail Surcharge

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

MentalIllnessPolicy.org

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii

Obookiah

OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

RailRipoff.com

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

SenatorFong.com

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii