What is Sales Tax?

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Sales tax is a type of income that the government asks its citizens to pay.

It is added to products that most stores sell, on top of the regular price of the items that you buy from them.

 

For example, you might buy a meal for $10. The sales tax in your area (in the United States, sales tax rate is determined by state) might be 9%. If this is the case, your total price of the meal will be $10.90 (109% of the original price). It is not optional for you to pay the extra $0.90.

But, you can know that the extra money will go straight to the government from that business. This type of tax is sometimes known as a regressive tax, meaning that poorer people pay more of it than rich people, because poor people tend to spend a higher proportion of their money on goods and services rather than investing or saving it.

That also means that they will pay more sales tax as a percentage of their total income. For this reason, some places that are more progressive or liberal have higher of other types of taxes, and lower sales tax.

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