Sales Tax and Use Tax in the U.S.

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In Oklahoma, sales and use taxes cover nearly one third of total tax income (Appendix 3). The State Use Tax in 2016 is about $ 235,106,981.15 and the rate is about 4.5% on sales price of tangible personal property purchased out-of-state for use or consumption in Oklahoma. City use tax collections amounted to $126,193,207.46 and county use tax totaled $30,588,218.52. From the table below we can see that no matter the use tax of state, city or country, mainly came from interest earned and went to various funds such as Educ. Reform Rev. Fund ($ 21,229,886.59) and General Revenue Fund (Appendix 4).

Iowa use tax is collected under two complementary use taxes: Retailer’s Use Tax and Consumer’s Use Tax. Retailer’s Use Tax is collected by registered retailers from the purchaser on the sale of all taxable tangible property and services. Retailers located outside of the State who maintain a place of business in Iowa are required to register with the Department of Revenue and collect the tax on all sales made into Iowa. Consumer's Use Tax is paid by individuals or businesses that purchase taxable goods or services outside of Iowa for using in the State. It's worth noting that Individuals who make occasional taxable purchases for use in Iowa grew quickly. Just during one year, the number of payments increased 223% and remitted tax increase 176.88% (Appendix 5)

Both sales tax and use tax have strong impacts on U.S economy, consumers and governments. They are tools for generating government revenues and controlling the prices of products and services. For further study of sales tax, we should consider if e-commerce should be an exception or be a part of taxable consumption.

Appendixes:

Appendix 1

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Appendix 2

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Appendix 3 The Tax Distribution of Oklahoma

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Source: The Oklahoma Tax Dollar Fiscal Year 2015-2016

Appendix 4 Revenue and Apportionment of Oklahoma

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Source: The Oklahoma Tax Dollar Fiscal Year 2015-2016

Appendix 5

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Source: Iowa Retail Sales and Use Tax Annual Report Fiscal Year 2016

References:

1. Amy Fontinelle,“ The History Of Taxes In The U.S.，” Investopedia.com, Retrieved from Jun 16,2017. http://www.investopedia.com/articles/tax/10/history-taxes.asp

2. Farnsworth, D. (n.d.). Sales Tax. Retrieved June 15, 2017, from https://www.saylor.org/site/wp-content/uploads/2011/01/Sales-Tax.pdf

3. Fox, W. 2003. History and economic impact of the sales tax. In Sales taxation, ed. Jerry Janata, pp. 9–24. Atlanta, GA: Institute for Professionals in Taxation.

4. Godfrey, T. (2015). Remote seller sales & use tax collection: Online sales; marketplace fairness; act now.

5. Haleigh Pike, “California’s Sales Tax Rate to Decrease in January 2017,” KRCR News, Dec. 30, 2016, http://www.krcrtv.com/news/local/shasta/californias-sales-tax-rate-to-decrease-in-january-2017/238477141.

6. Jared Walczak, Scott Drenkard, “State and Local Sales Tax Rates in 2017," Tax Foundation, January 31, 2017, https://taxfoundation.org/state-and-local-sales-tax-rates-in-2017/#_ftn11

7. Manzi, Nina (November 2007), Use Tax Collection On Income Tax Returns In Other States (PDF), St. Paul, Minnesota: Policy Brief, Research Department, Minnesota House of Representatives, retrieved 2008-09-26

8. Nicholas, A. (2011, November 29). Five advantages of raising the sales tax. Retrieved June 16, 2017, from http://budgetandpolicy.org/schmudget/five-advantages-of-raising-the-sales-tax

9. Nicholas, A., & Chapman, J. (2010, January 12). Increasing and Modernizing the Sales Tax. Retrieved June 16, 2017, from http://budgetandpolicy.org/reports/increasing-and-modernizing-the-sales-tax/pdf_version