The majority of US states assess a sales tax for many goods and services, but some have laws that exempt certain items. For example, California doesn't tax for most food items, but snacks are taxed. The average sales tax in American states is generally between five to seven percent.
In addition to a state-assessed sales tax, many cities assess sales taxes as well. Some cities levy a one to two percent tax in addition to state taxes. Revenue from city taxes may be used to fund a variety of services including education, public work projects, or city financial obligations. City taxes, however, are generally directed at one or two defined programs.
Visitors to a state can sometimes receive an exemption status from paying that particular state's sales tax. This exemption, however, is typically not applied to luxury items like hotel or dining services. Some goods or services purchased in a state without being taxed may be taxed later by the home state. Cars, for example, that are purchased in a state without a sales tax may be taxed by the purchaser's home state.
A few states do not have a sales tax, including Alaska, Delaware, Montana, New Hampshire and Oregon. Tax laws, however, can change rapidly and dramatically.
While it may seem ideal to live in a state without sales tax, the revenues generated by them can be beneficial to the residents by funding important programs. However, opponents of this tax often argue that states without it seem to function as well as states that have it.
Some people who wish to change tax law have proposed a federal sales tax, which would replace federal income tax. People who paid more than their fair share during the year might be eligible for rebates at the end of each year. This is an unlikely scenario, especially with so many states already imposing state sales taxes.. To increase this tax by perhaps twice its current average would likely be met with a great deal of resistance.
