For many, we suspect, the surprising aspect of the headline is that Washington does not have the nation’s highest combined state-local sales tax rate. Nope, just fourth, although the clustering is close, according to the Tax Foundation.
The Tax Foundation reports,
The five states with the highest average combined state and local sales tax rates are Tennessee (9.55 percent), Louisiana (9.52 percent), Arkansas (9.51 percent), Washington (9.23 percent), and Alabama (9.22 percent). The five states with the lowest average combined rates are Alaska (1.76 percent), Hawaii (4.44 percent), Wyoming (5.33 percent), Wisconsin (5.43 percent), and Maine (5.50 percent).
Washington’s not even in the top 5 when the state rate alone is considered.
California has the highest state-level sales tax rate, at 7.25 percent. Four states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. The lowest non-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent. Five states follow with 4 percent rates: Alabama, Georgia, Hawaii, New York, and Wyoming.
Washington’s 6.5% state rate ranks 9th. California’s top ranking may surprise those that think income taxes equate with lower sales tax rates.
TF analyst Janelle Cammenga reminds us of some of the positive policy attributes of the sales tax.
Retail sales taxes are one of the more transparent ways to collect tax revenue. While graduated income tax rates and brackets are complex and confusing to many taxpayers, sales taxes are easier to understand; consumers can see their tax burden printed directly on their receipts.
Way back in 2002, the Washington State Tax Structure Study Committee found that consumers reported consumers generally thought the sales tax was the fairest tax.
Surveys of individuals in other states find that the sales tax is perceived to be the most equitable tax by a majority of survey respondents.
Something to keep in mind in the coming weeks.