What are the Tax Rates in the USA?

Jim Wynne

Staff member
Admin
#11
Complicating this is the fact that some states allow local government subdivisions (counties, townships, cities and towns) to also levy a sales tax. (In Illinois, a Chicago purchase would include state, county, and city sales tax for a total of 10-1/2%)
Complicating it even further, most if not all states characterize the sales taxes as sales/use taxes, which means that if you purchase goods in one state for use in another state, you're technically liable for taxes in both places--the sales tax where the goods are purchased and the use tax in the state where the goods are used. I say "technically" because not much attention is paid to the "use" part of it. Most state tax return forms now have a line for reporting out-of-state purchases, but there are few who actually do report them.
 
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tomvehoski

#12
Sales tax can also hit multiple times. If I buy a new car in Michigan for $30,000 - I pay the state a 6% sales tax, or $1800. If I turn around and sell the car a year or two later for $20,000, the person buying it gets hit again for 6% or $1200. Say I want to buy a new car for $40K and trade in the old one, so they give me a $20K down payment with the old car - I still owe the state 6% of the purchase price of $40K.
 

Ninja

Looking for Reality
Staff member
Super Moderator
#13
...and gets even more entertaining when you live in one state but work in another... which state gets the income tax? They both want it.

Some states have 'reciprocity' where the income earned in NJ counts as being earned in PA (assuming living in PA), but you still have to file taxes in both states...and pay NJ for some of their employment taxes (right to work) but then get to deduct them from your PA taxes.
...and some neighboring states don't have reciprocity...

Hmmm, every time I type "taxes" I mistakenly type "takes" first then have to correct it. I wonder if it is subliminal...
 

Jim Wynne

Staff member
Admin
#14
...and gets even more entertaining when you live in one state but work in another... which state gets the income tax? They both want it.

Some states have 'reciprocity' where the income earned in NJ counts as being earned in PA (assuming living in PA), but you still have to file taxes in both states...and pay NJ for some of their employment taxes (right to work) but then get to deduct them from your PA taxes.
...and some neighboring states don't have reciprocity...

Hmmm, every time I type "taxes" I mistakenly type "takes" first then have to correct it. I wonder if it is subliminal...
Both my wife and I live in Wisconsin and work in Illinois. There is a reciprocity agreement, so we file state income tax returns only in Wisconsin. There are some people in this situation whose employers won't do the deductions and reporting to the other state, and those people have to keep track of deductions on their own and file quarterly returns.
 

Ninja

Looking for Reality
Staff member
Super Moderator
#15
Both my wife and I live in Wisconsin and work in Illinois. There is a reciprocity agreement, so we file state income tax returns only in Wisconsin.
We live in PA, I work in PA and my wife works in NJ (with reciprocity). I have to file both PA and NJ...the NJ income is simply $0 but I have to file it anyway just to keep the forests in check.
NJ still withholds NJ specific items such as municipality, NJDOT, etc.

The NJ stuff are deductions on Federal taxes, but not on my PA taxes. My PA specific ones are deductible on my PA taxes and my federal.

Taxes got silly a while ago and keep getting sillier...
 
S

Sean Kelley

#16
Some states also have property tax on vehicles, boats, etc in addition to the sales tax. Not all of them but KY and IN I know do, PA, AL and OH do not. Most states do not tax food unless it is at a restaraunt and served to eat.
 

Ninja

Looking for Reality
Staff member
Super Moderator
#17
It's the same here with VAT...
And now it's 23% of the sale price!!!
For example if you are a consultant every receipt you fill you have to charge your client with 23% VAT!!!
Even here (PA-USA), as a consultant, 100% of what is "sold" is considered a value addition and therefore would be taxable under VAT.
Since we have no VAT, and since the information/expertise that I am selling will be part of a larger "production process" it is not taxed. Only the last link in the chain is taxed.

If I sell equipment, I do not pay tax on the components I buy to install in the equipment (not the last link yet), but if I sell to the end user I must charge tax on the entire price.

If I sell the same equipment to a reseller...or if I sell it to a company that will use it to manufacture something else...it is not taxable. If I sell it to a person who simply wants to have it but will not use it to make something else, it is taxable since it is the last link in the chain.

It seems like two equivalent ways to accomplish the same thing.
VAT taxes each party according to the value they themselves added...
whereas our taxes defer the tax collection to the end and collect it all at once.
The major difference I see between the two systems is that it is easier to dodge the taxes (illegally) in the latter method.
 

Antonio Vieira

Involved - Posts
Trusted Information Resource
#18
Sales tax can also hit multiple times. If I buy a new car in Michigan for $30,000 - I pay the state a 6% sales tax, or $1800. If I turn around and sell the car a year or two later for $20,000, the person buying it gets hit again for 6% or $1200. Say I want to buy a new car for $40K and trade in the old one, so they give me a $20K down payment with the old car - I still owe the state 6% of the purchase price of $40K.
Here, if I buy a car for 30.000 Euro, I will pay at least 40% of State "car tax" and 23% of VAT on top of all!!!!
:nope:
 
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