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Selective Sales Taxes for States

It is important to be familiar with selective sales taxes in your state. In fact, you may not realize how much you are actually paying in state tax. Generally speaking, a selective sales tax is applied to a single commodity (such as tobacco, alcohol, food, or gasoline). In most cases, you will pay a higher tax rate on these items ? although rates vary based on the state in which you reside. A particular selective sales tax in your state may not exist in another state, and vice versa.

Selective sales taxes have been around for nearly one hundred years. The first instance of this type of tax occurred in 1919, when the State of Oregon decided to selectively tax gasoline. While this kind of state tax is a good way for state governments to bring in additional funds, it does not produce nearly as much revenue as a general sales tax.

It seems like every year, various states decide to selectively tax the sales of particular items. Over the past few years, many states imposed a sales tax on soda and other sugary drinks. In 2010, the State of New York levied a tax on sliced bagels at a rate of $.08 per bagel.

Are states using selective sales tax as a way of fighting bigger problems that have long plagued the United States? Some people believe this to be true. For example, placing a tax on soda allows a state to increase revenue. But along with this, there are claims that a soda tax discourages consumers from buying these drinks. In turn, obesity and other health-related issues could possibly decline. While that may be a positive consequence overall, there are also many who find this sort of tax to be unfair, arguing that soda drinks are the most popular in low-income communities. With a selective sales tax, consumers will have to pay more to get what they want. In addition, soda manufacturers are also worried about how these changes could affect their bottom line.

No matter what state you live in, there is a good chance that you pay selective sales tax on particular items. Also keep in mind that there are numerous taxing districts within each state ? and the sales tax rate in one city may differ from the sales tax rate in another. As with any tax-related matter, it is important to stay informed and understand what state taxes you are responsible for paying, as a consumer and as a resident.


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