What does sales tax pay for and how do states who don't have sales tax make up for it?

Question

I live in a state that has sales tax, income tax and property tax. I do know that some states do not have a sales tax, so I'm wondering why, exactly.

Answer 1

Your question is rather broad.

Typically, local governments are supported by a combination of the following:

State income tax.

Local income tax.

Property taxes.

Sales Tax.

User fees.

Some of these are progressive--more income, more tax.

Some of these are selectively progressive.  Property taxes often build in homestead exemptions or freeze the tax rate if the home owner is

65.

I pay 8.25% sales tax.  I have no state or local income tax.  I have horrendous property taxes.  I no longer have the job I had when I got the house, but the taxes stay high.  My only real choice to lower my tax bill is to move...

Answer 2

Sales taxes pay for whatever the State Legislature decides to spend them on.

States without a sales tax typically have slightly higher income or property taxes to make up for it.  At least 2, DE and HI, have a gross receipts tax that is levied on businesses instead of consumers.

NH has neither sales tax nor does it tax earned income.  It has breathtakingly high property taxes though.

Answer 3

It really boils down to how the state wants to fund their budgetary expenditures. I live in Texas. We don't have an income tax on individuals, but we've got high sales and property taxes. Some of the states that don't have sales tax fund themselves through sales taxes at the municipal level, while others have excise taxes similar to sales taxes.

This link will show detailed information about each state's sales tax system.   http://en.wikipedia.org/wiki/Sales_taxes...

The states use the taxes they collect to fund education, infrastructure (roads, highways), state welfare...basically any of the programs run by the state government.

Hope this helps!