States Raise Sales Taxes to Record Levels

States across the country have been trying to plug their budget gaps by hiking taxes, including seven increases in sales taxes last year.

A new report from corporate tax software provider Vertex found that there was a more than 30 percent increase in tax changes throughout the U.S. last year, compared to the average number of changes between 2000 and 2007.

Among the findings:

▪    The average sales tax rate in the U.S. now stands at 5.468 percent – the highest average recorded rate since Vertex began tracking sales tax rate changes in 1982.

▪    The average county sales tax rate in the U.S. held steady at 1.629 percent, and the average city rate declined slightly to 1.532 percent.

▪    Catawba Indian Reservation, Lancaster County, South Carolina has claimed the top position as the highest city sales tax rate at 8 percent, topping the 2008 rate found in Wrangell, Alaska (7 percent).

▪    The combined average sales tax rate has risen to 8.629 percent, up from 8.574 percent in 2008. The highest combined rate (12 percent) belongs to Arab, Cullman County, Alabama.

And don’t expect to avoid taxes by ordering over the Internet. More and more states are starting to tax Internet sales. The California Senate recently passed a so-called Amazon tax, and Colorado imposed new requirements on Web retailers that will have them sending customers a statement every year of how much tax they should be paying on their purchases. Should be interesting to see how many Coloradans pay up as a result.