California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

California, Tennessee, Washington, Oklahoma and Louisiana have the highest combined
state and average local sales tax rates, according to updated figures released last
week by the Tax Foundation.

However, California’s combined state-local rate is not the highest.  That honor goes
to Tennessee.  The states with the highest combined state-local rates are Tennessee
(9.41 percent), California (9.06 percent), Washington (8.78 percent), Oklahoma (8.44
percent) and Louisiana (8.43 percent). The states with the lowest non-zero combined
rates are Alaska (1.61 percent), Hawaii (4.38 percent), Maine (5 percent), Virginia
(5 percent), Wisconsin (5.42 percent) and Wyoming (5.42 percent).

However, California has the highest statewide general sales tax rate of 8.25 percent
(including a 1 percent mandatory “local” add-on rate), and six states tie for the
second-highest rate of 7 percent: Indiana, North Carolina, Mississippi, New Jersey,
Rhode Island and Tennessee.

Colorado has the lowest non-zero statewide rate of 2.9 percent, followed by seven
states with a 4 percent rate: Alabama, Georgia, Hawaii, Louisiana, New York, South
Dakota and Wyoming.

On the other end of the scale, Delaware, Montana, New Hampshire and Oregon all have
the lowest combined rates of 0 percent.  This is because several do not have a state
sales tax but have higher property and income taxes.

The states with the highest average local sales tax rates are Louisiana (4.43 percent),
Colorado (4.34 percent), New York (4.3 percent), Oklahoma (3.94 percent) and Georgia
(3.02 percent). The states with the lowest non-zero average local rates are Pennsylvania
(0.22 percent), Hawaii (0.34 percent), Minnesota (0.34 percent), Wisconsin (0.42 percent)
and Utah (0.66 percent).

The Hawaii numbers are a bit misleading because the state doesn't have a straight sales
tax, but instead uses a multi-layered general excise tax, which hits the customer, the
retailer, the wholesaler and potentially the manufacturer.

“Sales taxes are at the same time transparent and opaque,” said Tax Foundation Staff
Economist Kail Padgitt, Ph.D., who authored Tax Foundation Fiscal Fact No. 196,
“Updated State and Local Option Sales Tax.” “Taxpayers can easily see sales tax rates
by looking at the receipt for any purchase, but depending on the locality in a specific
state, there may be a variety of local option sales taxes in addition to the state rate,”
said Padgitt.

I am Tim Johnson and this has been the California Business Minute.