Taking Advantage of Different State’s Sales Tax
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While I was traveling in Raleigh, North Carolina, I bought a wireless mouse at the Apple Store to work with my Macbook Pro. It wasn’t until I heard the cashier tell me the total did I realized the sales tax was different than where I live (Southern California). I checked the receipt, and there in big letters were Tax@6.75%: $4.66.
I used to live in the border of Orange County and Los Angeles County, where the sales tax was 7.75% and 8.25% respectively. I remember thinking about our geographic location before we purchased anything because it was possible that we can pay less if we went to another location close by.
Now you might be thinking that 7.75% and 6.75% is only a difference of 1%, but if I bought my Macbook Pro in North Carolina, I could’ve saved myself $20. Sure it still wasn’t much but I would be saving much money if I consistently buy in a low sales tax state.
I’m not sure why different states are allowed to dictate different sales tax, but I remember the simple times when I was in Hong Kong and there wasn’t any sales tax added on top of the merchandise price! In Hong Kong, the sales tax is included in other taxes for the merchants which make much more sense to me. When we go shopping and it was advertised for $100, we paid $100 and not $106.75 at checkout.
Of course, I shouldn’t complain too much because when I was in Toronto (Canada), the sales tax was 15% (it has gone down to 14% now I heard). Why the government needs 14-15% to keep themselves from losing money managing everything is beyond me but I certainly never had the choice of not paying.
No matter where we are, there will probably be a place that will charge less sales tax than the most convenient location. Would you go out of your way just to save that extra 1%? If you were me, would you wait to buy all the larger purchases until I was on a business trip? What do you think?
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Carnival of Money, Growth and Happiness #46 | Credit Card Lowdown on May 24th, 2008 at 11:32 am Says:
[...] presents Taking Advantage of Different State’s Sales Tax posted at Money Ning. Different states have different tax rules so should we fully take advantage [...]
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Carnival of Personal Finance #154 on May 26th, 2008 at 10:41 am Says:
[...] Money Ning presents Taking Advantage of Different State’s Sales Tax [...]
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Carnival of Personal Finance #154 « Vanessaterreto’s Weblog on May 29th, 2008 at 1:15 pm Says:
[...] Money Ning presents Taking Advantage of Different State’s Sales Tax [...]
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Carnival of Personal Finance #154 « Cayman Alteri’s Weblog on June 2nd, 2008 at 1:13 pm Says:
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Actually, I believe it’s tax law that you are responsible to record the difference is sales tax between your home state and the state the purchase is made in. You are supposed to reflect it on your yearly tax returns (or something along those lines. I know its a law for internet purchases w/out charging sales tax).
Of course, no one in the right mind would track all this, as the IRS doesn’t really enforce it anyways.
To my knowledge, Alberta has no provincial sales tax, but you are still responsible for GST (5%). AFAIK, Oregon has no sales tax at all.
Wow, I thought we had it bad in Texas at 8.25% sales tax…I can’t imagine paying 14-15%! That is a huge chunk of change. Then again, they have all their health care paid for by the government, so I guess it’s a trade-off. And I wonder how Oregon makes up for no sales tax — anybody know?
@Emily,
It’s called Nike
6.75%? Ha, that’s nothing. Over here in the UK our sales tax (VAT) is 17.5%. In some parts of Europe it’s over 20%!
But then, we have to fund an even more bloated beaurocracy.
6.75% sounds like a dream!
I can’t believe the numbers I am hearing for sales tax!
In the US, certain non-profit organizations are given tax-exempt status. The proprietor must sell to these organizations without the additional sales tax. If it was rolled into the cost of the merchandise, this could not be done easily or reliably.
As far as the different states “being allowed” to charge different amounts, sales tax is a state function, not a federal function.
I’m not surprised that UK and Canada have higher sales tax - they also have socialized medical care, and a giant, intrusive governments. Personally, I’d rather just pay for good medical service than have everything taxed to pay for what the government considers “adequate” coverage. Thanks, but the waiting rooms at the doctor’s office and the ER are plenty long enough already.
Hong Kong has no sales tax, period. The Hong Kong government is in a much better shape than any North American governments. Except during extreme economic downturns, the government routinely had surplus. However, the government considered implementing a sales tax a few times, but the execution is deemed too difficult, and there is a lot of resistances from various sectors.
In Canada, there is a 8% federal sales tax, and all provinces except Alberta have their own provincial sales tax.
In Japan and many European countries, the sales tax is included in the listed price.