Sales Taxes

Sales taxes, or consumption taxes, are an important revenue source that accounts for close to half of all state tax revenues.  Forty-five states levy broad-based sales taxes and every state levies at least some type of tax on consumption.  While sales taxes are vital to funding government in many states, they are not without problems.  Sales taxes are inherently regressive—requiring lower- and middle-income taxpayers to spend a larger share of their household budgets in tax than their wealthier neighbors.  Most sales taxes are also levied inconsistently across different types of purchases, often exempting huge portions of final sales from tax.  The following resources provide both general and state-specific information about the mechanics of sales taxes and the options available for reforming those taxes. 

 

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Testimony