Submitted by Suanne Z. Thamm
Reporter – News Analyst
March 19, 2021
According to a report by Janelle Cammenga for the Tax Foundation the average level of state and local revenue coming from sales tax is 23.3 percent. But Florida comes in at 38.3 percent ranking the state as 6th highest in the nation. Leading the nation are Louisiana (42.3 percent), Nevada (41.3 percent), Tennessee (40.7 percent), Arizona (40.5 percent) and South Dakota (39.3 percent). Four states have no sales tax: Delaware, Montana, New Hampshire and Oregon. Alaska allows local jurisdictions to impose sales tax, but has no statewide sales tax.
Florida relies heavily on sales tax in the absence of a state income tax. The same is true for Nevada and Tennessee. According to Cammenga, “Consumption taxes (like sales taxes) are more economically neutral than taxes on capital and income because they target only current consumption. Income taxes fall on both present and future consumption, thus partially acting as a tax on investment by capturing savings. Consumption taxes are generally more stable than income taxes in economic downturns as well. Although there was an initial drop in consumption during the coronavirus crisis, sales tax revenues have bounced back as many stores have reopened, and as people have moved much of their shopping online.”
In other recent Tax Foundation studies of states, Florida ranked fourth for overall structure of its tax system, coming in at first for individual income taxes, sixth for corporate taxes, and 13th in the property tax category.