In many ways, it is not false to state that taxes come at you from all directions. In this day and age, there are a variety of levels of government that are granted taxing authority of different types. Two levels of government that are responsible for imposing a range of different types of taxes are the state and the county. Even though a great deal of media attention remains focused on taxes imposed by the federal government, these two levels of government across the United States prove to extract a considerable tax burden from their citizens. State and county governments utilize a variety of different types of taxes to generate revenue, including income, sales and property taxes.
Most states in the U.S. are required by law to maintain balanced budgets each and every year. In common parlance, this oftentimes is referred to as "pay as you go." Therefore, the manner in which the different states impose taxes tends to fluctuate and vary a good deal over the course of time. The majority of states in the country rely heavily on two different types of taxes: income and sales. With that in mind, you do need to understand that some states do not have an income tax (Texas and Florida, for example). Moreover, the sales tax rates can vary fairly significantly from one state to the next. States also tax such consumable items as gasoline, cigarettes and liquor.
On the county level in most jurisdictions across the country, the most common way of raising revenue is through a property tax. Generally speaking, these property taxes are imposed on both real estate and on motor vehicles. County governments also typically rely upon a sales tax, as well.
Many counties also tend to have what are normally referred to as "special assessment districts." For example, if there is a new housing development being constructed within the county, a typical special assessment district might be established, affecting property owners in that development. This special assessment district will impose taxes on these individuals to accomplish such objectives as putting in sewer lines or roadways. The theory is that because these specific individuals will benefit from the improvements, it is logical to tax them specifically and not spread the tax burden across the county.
In addition to the federal government, a majority of states in the country also assess income taxes against their residences. Although not particularly commonplace at this juncture in time, a growing number of municipal and county governments have started to assess a minimal income tax on their residents, as well.
Read More: Tax Deductions: A List of Items That Can Be Claimed on Income Taxes
Sales taxes are imposed on the items purchased by consumers. In many locations, the sales tax assessed on a purchase actually is a set of different sales taxes imposed by different governmental units including the state, county, city and a special assessment district such as a public transportation entity.
On the one hand, some people do consider sales taxes to be a regressive tax. In other words, these taxes have a heavier impact on people who have a lower income than they do on wealthier individuals. All people must make basic and essential purchases, which are subject to sales taxes. Therefore, a higher percentage of a low income individual's finances will go towards sales taxes than is the case for a person in a higher income bracket.
On the other hand, not only to residents of a particular state, county or city pay sales taxes, but visitors to these jurisdictions also pay sales taxes. Therefore, the taxing authority and the community itself benefit from visitors who pay sales taxes on items purchased while within that jurisdiction.
Some states, counties and cities exempt certain types of purchases from sales taxation. For example, some states exempt food purchased in a grocery store from sales tax. Services in many states are not subject to sales taxes (for example, a lawyer or accountant does not add sales tax to the tab).
Property taxes are imposed in a number of different ways. The most common type of property tax is that which is imposed on real estate. This type of tax is based on a semi-regular appraisal of the real estate in question. Automobiles are also subject to property taxes. Each year when a person renews his or her license plate, that individual really is paying property tax. In some states, counties and cities, businesses also face property tax on inventories and equipment that they maintain as part of their operations.
- U.S. Treasury Department, State and Local Taxes Fact Sheet
- State Tax Handbook (2009), CCH Tax Law Editors, 2009
- State and Local Taxation and Finance in a Nutshell, M. David Gelfand, Joel A. Mintz & Peter W. Salsich, 2000
Mike Broemmel began writing in 1982. He is an author/lecturer with two novels on the market internationally, "The Shadow Cast" and "The Miller Moth." Broemmel served on the staff of the White House Office of Media Relations. He holds a Bachelor of Arts in journalism and political science from Benedictine College and a Juris Doctorate from Washburn University. He also attended Brunel University, London.