Why Do We Pay Sales Tax? What Are the Benefits?

In the US, all Americans have probably paid sales tax at least once. Except maybe those who live in Alaska, Delaware, Montana, Oregon, and New Hampshire. These five states don’t levy such taxes on purchases.

But for the rest of us, sales taxes are a fact of life. Most people complain about that, but paying sales tax helps fund many social services and makes our government run more smoothly.

So why do we pay sales tax? Read on to find out the benefits of this tax and why it should stay.

What Is Sales Tax?

Sales tax is a local tax on goods or services that are sold. It’s added to the price of an item or service when you go to the checkout counter.

When you pay for something, there will be two prices: the base price and sales tax. For example, if a shirt costs $20 and has a 6% sales tax rate, your total would be $21.20. The equation would look like $20 + ($20 * .06) = $21.20.

Why Do We Pay Sales Tax?

Sales tax is a fair and reliable source of revenue for the state. Taxation is a way for governments to raise money for local development.

It’s a fair way to raise revenue because everyone pays their fair share, and it’s reliable since it doesn’t depend on how much money people make. Governments also use sales tax to ensure that those who benefit most from government services help pay for them.

Sales Tax Benefits

Sales tax revenue goes right back into your community to improve your quality of life. For example, if some roads need repairs or if your local park could use some new benches, sales taxes will help make this possible. You might not see exactly how your money is being spent, but rest assured that it goes towards improving things for everyone in town.

Who Collects Sales Tax?

Businesses collect sales tax. When you buy something, the seller adds the sales tax to your bill and sends that money to the government.

For small business owners, they can go to websites like and have professionals help them file their tax forms so they pay the government the proper amount of sales tax.

What Items Are Taxable?

Most items are taxable. This includes the sale of goods, such as clothing, as well as services like gift wrapping. However, there are some exceptions to this rule.

Some states exempt certain products from sales tax. Texas is one of them. In Texas, items like flour and sugar aren’t subject to sales tax.

Other states offer special rates for certain groups of people. Veterans usually pay sales tax just like everyone else. But when they purchase a vehicle, the tax amount may be reduced.

Support the Government With Sales Tax

Why do we pay sales tax? The primary reason is to support the government. Without sales tax, many services would have to be cut or eliminated.

Schools, fire departments, and police forces would be understaffed or shut down entirely. Roads wouldn’t get fixed and bridges wouldn’t get built.

Our lifestyle articles are a great way to learn more about ways to spend your money. Read a few of them. You’ll be surprised at all the things you can do with your extra time besides paying sales tax.

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