Texas has a very high sales tax at 6.25 percent, and Austin adds on 2 percentage points. I’ve always thought we were high in this category.
Before our current vacation in Colorado, I was pleased to notice that its sales tax rate is only 2.9 percent. On my first purchase in Steamboat Springs, though, the tax rate was 8.4 percent — the town adds 5.5 percentage points to the state rate. Annoying to me, but sensible, and probably efficient and equitable. After all, much of the purchasing is by tourists like me, and our demand for goods here is probably quite inelastic, so the excess burden of the tax is small.
Also, this is a pretty fancy tourist destination, so the tax is probably somewhat progressive overall. Finally, as my wife notes, without such a tax we wouldn’t be paying for the public services that the town provides us. So I guess I can’t complain.
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“Texas has a very high sales tax at 6.25 percent…”
I would gladly trade that for my province’s (NL) 13%.
For your information, in Europe there are sales tax rates as high as 20% (Austria, Italy, Slovenia) or even 25% (Denmark). However, complaints about the sales tax are very uncommon, since the law requires retailers to include the sales tax in the tagged prices – most people wouldn’t even know how high their sales tax rate is.
You should not complaining about the tax itself, but about the magnitude of the tax. A 10% sales tax on a city that has a daily revenue of $100,000 is $10K. Now ask yourself, do the public services have a constant maintenance cashflow of $10k dollars a day? That would be $3.65 million dollars a year in this scenario. Steamboat has a population of about 9,000 add on a tourist population of a steady 1000 and you have a total population of 10000… So the residents of this city require public services that amount to $133,225 per person per year. AND THAT IS JUST SALES TAX. WOW. Now I understand that this is over simplifying things, but the real complaint should be directed towards the expressiveness of taxes. Audit your city records and see where these dollars are really going and you’ll have something to complain about again.
But why is the burden a sales tax, rather than a property tax that would be levied on residents and tourists alike (through higher hotel rates)? I imagine Steamboat is trying to get more tax revenue from people who just come for the day. But is that an equitable distribution of the cost of running the city? In other words, do people who buy things in Steamboat consume that proportionate amount of its city services, compared to the revenue that’s generated through property tax? I’d guess not; it sounds to me like they’re soaking the tourists. Hope you had fun…
frankenduf: Complaining about the level of taxation or the method of tax assessment is quite reasonable. Complaining about having to pay taxes in general is not.
I live in Colorado, unincorporated Arapahoe County. Our tax rate is 3.2% but there are no businesses to buy from. So I generally pay Aurora’s 8.25% rate. But it’s worth noting that Colorado’s overall tax burden is 49th in the nation – we pay relatively very little for the privilege of living here. And compared to the real estate, the sales tax in Steamboat is very, very small, regressive taxation at its finest as I realize when I ski there.
Jeffrey McManus: The person who rang up the purchase probably does not live in Steamboat Springs. That being said, I disagree with the OP because sales taxes are always regressive; i.e., they hit the poorest hardest, because poor people spend all they earn (and then some), whereas wealthy people sock a lot of it away.
@Jeffrey McManus He didn’t say ONLY – just proportionally more.
And since when is 6.25% a high sales tax? Not much less than New York’s, barely more than Massachusetts’s, less than California’s….