Wednesday, March 10, 2010

Higher Taxes

The tax guy is just starting to ramp up his collections. He has to if he wants to fund all the bailouts and budget deficits. States are starting to go after sales taxes.

From yahoo finance originally printed in Forbes.

While President Obama's push to raise federal income taxes for the wealthy gets lots of attention, the continuing upward creep in the sales tax rates imposed by state and local governments has gotten less notice.

But Vertex Inc., which calculates sales tax for Internet sellers, reports that the average general sales tax rate nationwide reached 8.629% at the end of 2009, the highest since the Berwyn, Pa., company started tracking data in 1982. That was up a nickel on a taxable $100 purchase from a year earlier and up nearly 40 cents for the decade. The highest sales tax rate in the country now stands at 12%.

During 2009 seven states and the District of Columbia raised sales tax rates, with one jurisdiction -- North Carolina -- actually doing it twice. Only four states hiked rates in 2008 and only one in 2007. Given state budget problems, the 2009 state sales tax increases aren't surprising.

Possibly by the end of 2010 and for sure 2011 state insolvencies will be making front page news. There will either be state defaults or government bailouts of the states. Munis would rank at the top of investments I would avoid. Unfortunately everyone who got burned in stocks is not moving all their money to munis and bonds.

In general I wish they would really hike the sales tax and eliminate the income tax. In a sense make only consumption taxable. Our country would be alot better off.

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