Sales Tax
Candlefocus EditorIn the United States, the federal government does not impose any type of sales tax. Instead, the states, municipalities, and other jurisdictions are left to decide whether or not to have sales taxes and establish their own rates. State sales taxes range from zero to just over ten percent, and some states also impose local taxes for county, city, or special-district services. As of 2021, the four U.S. states that do not have a statewide sales tax are: Delaware, Montana, New Hampshire, and Oregon. As of the same date, the fifth Unites States state without a statewide sales tax is Alaska, however, local and municipality taxes do exist.
Value-added taxes, or VATs, are charged on a similar concept to sales taxes. However, instead of assessing the tax on the total transaction amount, value-added taxes are imposed on the value that has been added at each successive stage of production. This type of taxation is used in most countries outside of the United States, though some U.S. states—including Washington, South Dakota, and Hawaii—have experimented with the concept.
In conclusion, sales taxes and value-added taxes are two of the primary means by which governments collect taxes. Sales taxes are a form of consumption tax that is charged on the retail sale of goods and services and are used by the majority of U.S. states, as well as many other countries. Meanwhile, value-added taxes are assessed on the value that is added at each successive stage of production and are used in most countries outside of the United States.