Business buster: The worst U.S. cities for sales tax

March 31, 2010 by Bob Hill

Posted in: Finance, In this week's e-newsletter, Latest News & Views

The average general sales tax hit an all-time high of 8.63% toward the end of 2009. Here’s where it’s the worst.

Seven states raised their sales tax rates in 2009, as did Washington, DC. North Carolina thought it was such a good idea, it did so twice. That’s in addition to countless small cities and towns that have raised the sales tax in response to budget constraints and a dip in commerce.

Among the major U.S. cities where the sales tax is highest:

Chicago – 10.25%
Seattle – 9.50%
San Francisco – 9.50%
New Orleans – 9%
Phoenix – 8.3%
Dallas – 8.25%
Charlotte – 8.25%
Las Vegas – 8.1%
Philadelphia – 8.0%
Atlanta – 8.0%

While these metropolitan areas rake in huge profits thanks to exorbitant sales tax rates, some tourist destinations profit from tax rates as high as 12%. New Orleans International Airport charges 10.75% sales tax. Snowmass, a Colorado resort, charges 10.4%.

Arab, Alabama tops the charts with a ridiculously high 12% sales tax rate, due in large part to the fact that 4% goes to the state of Alabama, 4% goes to the county Arab is located in, and the final 4% goes to the town itself. There are several other small towns that adhere to a similar model — kicking back to the county and state at the expense of the locals and tourists.

The question is: How do we stop the bleeding?

What steps need to be taken to ensure the sales tax rate doesn’t spiral completely out of control? Are we headed in the right direction or is the current administration moving us in a direction where city and local businesses will have no choice but to continue imposing higher rates
on their patrons?

Feel free to share your thoughts in the comments section below.

Source: “U.S. Sales Tax Rates Hit Record High,” by William P. Barrett, Forbes, 3/8/10

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Tags: sales tax, Washington

http://www.epiceg.com Christopher Cox

A society and a nation has NEVER taxed itself into prosperity. Burdensome taxes are an anathema to free enterprise and a thriving economy and ultimately to higher standard of living for all. Lowering taxes is the ONLY way – in the long-term – to insure a healthy, organically growing economy. Under this scenario, everyone wins.

Democrats simply do not get it. It is not part of their DNA and for that reason need to be thrown out of office.
Ken Golovko

It should be noted that in some cases (Seattle, Dallas, Las Vegas) the cities in question lie in states with no income tax.

Also, an observation for Mr. Cox: Reduction in the size of the government (grown largest ever under former President Bush, and still growing) in addition to appropriate taxing will be the best means to reduce our deficit.

Please recall the clamor that the Republican party made over former President Clinton’s tax increases. We were told that business would fail, and that the country as a whole would never recover. The results were diametrically opposed to those predictions, and the country lowered its deficit and delivered a budget surplus to the following Republican administration. That surplus was subsequently turned into the largest deficit ever because of the growth of the government and reduction in taxes.
Keith

This is not a partisan issue and blaming one side or the other is really a nonsense way to be distracted from the real problem. We as a society should expect our government to be solvent.

The only reason governments require high taxes is because it has high expenditures. What the politicians on both sides and we as a society have to do is cut services/salaries/benefits/entitlements, etc. But nobody wants to do that. It is simple math that has very serious consequences.

Do we let people “die on the streets” because of lack of health insurance or because they don’t have extension after extension of unemployment insurance? Do we wait in longer lines at the DMV?

I don’t know the answer. The ramifications are far reaching but a systematic approach of hardnosed cost cutting measures needs to take place – and it should start with the leaders of the organizations – City Managers and Mayors, Superintendants, Politicians and heads of government agencies. You can’t have cost cutting without it starting at the top and you can’t expect the workers to take a hit without the guys at the top taking the hit 1st.
D. Wynn

We simply have too many taxing authorities – all of which spend every cent they can get their hands on. A budget for my business means this is the amount of money I have to spend, and I cannot spend more unless I increase it with some equal action such as cutting costs, earning more money, etc.

I’m very in favor of a (one) flat tax, but it will never happen because look at all the government workers who would be out of a job.
porterdude

Well stated, Ken. Republicans seem to conveniently forget those facts. The only president since the Korean war era to actually reduce the size of government was Bill Clinton. Everybody else just talks about it.
Ben McGrath

You have failed to list San Diego and surrounding areas which come in at #5 at 8.75%.
http://www.epiceg.com Christopher Cox

To say this administration is headed in the wrong direction – tax wise or any other, would be a quanteam leap short of an understatement. Taxes and expenses, unless they get their arms around it now, will bleed this nation to the point of insolvency.

The time to act is NOW!!!
Laura Soles

This article also failed to mention that Buffalo, NY is 8.75%, Niagara Falls, NY is 8% on top of the fact that we have one of the highest state income tax rates.

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