Editing Tax (section)

====Sales====
{{Main|Sales tax}}
Sales taxes are levied when a commodity is sold to its final consumer. Retail organizations contend that such taxes discourage retail sales. The question of whether they are generally progressive or regressive is a subject of much current debate. People with higher incomes spend a lower proportion of them, so a flat-rate sales tax will tend to be regressive. It is therefore common to exempt food, utilities, and other necessities from sales taxes, since poor people spend a higher proportion of their incomes on these commodities, so such exemptions make the tax more progressive. This is the classic "You pay for what you spend" tax, as only those who spend money on non-exempt (i.e. luxury) items pay the tax.{{Citation needed|date=January 2025}}

A small number of U.S. states rely entirely on sales taxes for state revenue, as those states do not levy a state income tax. Such states tend to have a moderate to a large amount of tourism or inter-state travel that occurs within their borders, allowing the state to benefit from taxes from people the state would otherwise not tax. In this way, the state is able to reduce the tax burden on its citizens. The U.S. states that do not levy a state income tax are Alaska, Tennessee, Florida, Nevada, South Dakota, Texas,<ref>Although Texas has no individual income tax, the state does impose a [[franchise tax]]—soon to be replaced by a margin tax—on business activity that, while not denominated as an income tax, is in substance a kind of income tax.</ref> Washington state, and Wyoming. Additionally, New Hampshire and Tennessee levy state income taxes only on [[Dividend tax|dividends]] and interest income. Of the above states, only Alaska and New Hampshire do not levy a state sales tax.

In the United States, there is a growing movement<ref>{{cite news |url=http://www.economist.com/business/displaystory.cfm?story_id=13110436 |title=Economist.com |newspaper=The Economist|date=12 February 2009 |access-date=27 March 2009}}</ref> for the replacement of all federal payroll and income taxes (both corporate and personal) with a national retail sales tax and monthly tax rebate to households of citizens and legal resident aliens. The tax proposal is named [[FairTax]]. In Canada, the federal sales tax is called the Goods and Services Tax (GST) and now stands at 5%. The provinces of British Columbia, Saskatchewan, Manitoba, and Prince Edward Island also have a provincial sales tax [PST]. The provinces of Nova Scotia, New Brunswick, Newfoundland & Labrador, and Ontario have harmonized their provincial sales taxes with the GST—Harmonized Sales Tax [HST], and thus is a full VAT. The province of Quebec collects the Quebec Sales Tax [QST] which is based on the GST with certain differences. Most businesses can claim back the GST, HST, and QST they pay, and so effectively it is the final consumer who pays the tax.