Sales Tax

## Sales Tax

Sales tax is a single-stage consumption tax collected only when a good or service is sold to the end consumer. It is the primary consumption tax in the United States, where there is no federal VAT.

### US Sales Tax

The US has no federal sales tax. Rates are set by states and localities:
- **Highest combined rates**: Tennessee (9.55%), Louisiana (9.55%), Arkansas (9.47%).
- **No sales tax**: Oregon, Montana, New Hampshire, Delaware, Alaska (no state tax).
- **Average combined rate**: ~6.6%.

### Sales Tax vs. VAT

| Feature | Sales Tax | VAT |
|---------|-----------|-----|
| Collection point | Final sale only | Every stage |
| Revenue leakage | Higher (relies on retailer compliance) | Lower (self-policing) |
| Business-to-business | Exempt (resale certificates) | Netted through input credits |

### Impact on Salary Comparisons

When comparing salaries across US states, sales tax is an important cost-of-living factor. A salary in Oregon (0% sales tax) goes further for consumer purchases than the same salary in Tennessee (9.55%).