Taxpayer asks:
hi taxgirl , i have a question, i bought a 2009 nissan on january 17 2009,do i qualify for the sales tax deduction?
Taxgirl says:
Don’t hate me but no. The law says that the new car must be purchased after February 16, 2009 and before January 1, 2010, to qualify for the deduction.
But hey, look on the bright side… It’s not a Chrysler.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
Taxpayer asks:
In your articles about the states, you keep saying that sales tax is regressive. But since everybody is paying the same percent, doesn’t that make it a flat tax which means it’s not regressive? I’m confused.
Taxgirl says:
Good question!
Most sales taxes are flat rate taxes in that the same percentage is levied on the same kinds of items. So, if you and I both buy a package of gum in Philadelphia that costs $1.00, we both pay 7% on that package of gum (at least this week).
Where the tax is considered regressive is as a percentage of income. Let’s assume that you make $100,000 and I make $20,000. If we both buy $5,000 worth of taxable items for the year, we both pay $350 in sales tax (assuming we’re still in Philly). Now, your effective tax rate is .35% and mine is 1.75%. In other words, I’m paying an effective rate of 5 times more than you are as a percentage of my income.
In some states, “essential” goods like grocery items, clothing and medicines are exempt from sales tax. But in many states, sales tax is imposed on essentials – in North Carolina, for example, clothing is taxed. While it probably follows that you’ll buy more expensive clothes because you have more money, it will likely still cost more as a percentage of income to pay the sales tax on my clothes because I make less money overall. Does that make sense?
That calculation changes a bit when you consider excise taxes. Those are taxes which are generally imposed on alcohol, cigarettes and other “luxury goods”, sometimes associated with “sin taxes.” Excise taxes are considered even more regressive than sales taxes because of the higher rates associated with those taxes. In most cases, those are taxed by volume or type and not by cost, which makes the excise tax difference between a very nice bottle of Mondavi and a bottle of Boone’s Farm non-existent.
A number of alternatives to the sales tax have been proposed, including the infamous Fair Tax, to address concerns about the regressive natures of sales taxes. To date, none of the alternatives have been implemented.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
The beginning of summer often means cookouts, trips to the shore and camping. For many (including my parents), it also means the beginning of hurricane season.
Hurricane season begins June 1 and lasts through the end of October. Thankfully, NOAA (National Oceanic and Atmospheric Administration) forecasters predict a nearly normal Atlantic hurricane season for 2009. They still caution, however, that it is important to be prepared.
Many states and localities offer sales tax holidays on hurricane preparedness supplies. The first one to make the announcement this year is Virginia: Virginia’s sales tax holiday for hurricane preparedness begins tomorrow (Memorial Day) and continues through next Sunday.
Virginia retailers will not charge sales tax on items that can be used to prepare homes to withstand hurricanes and floods and to fill emergency supply kits. In general, this includes generators costing $1,000 or less, and other supplies costing $60 or less. Bottled water (including flavored water) and water storage containers also qualify for the sales tax exemption.
For a complete list of exempt items, check out this bulletin from the state of Virginia (it downloads as a pdf).
The following week, beginning on Saturday, May 30, and lasting through Sunday, May 31, marks Louisiana’s hurricane preparedness sales tax holidays. On these two days, shoppers can purchase specified emergency supplies sales tax free.
During the two-day holiday, tax-free purchases are allowed for the first $1,500 of the sales price of items such as self-powered light sources (including flashlights and candles – note that candles are not exempt in Virginia), portable self-powered radios, two-way radios, and weather-band radios and batteries.
The 2009 Louisiana Hurricane Preparedness Sales Tax Holiday does not extend to items or supplies purchased at airports, public lodging establishments, hotels, convenience stores, or entertainment complexes.
For a complete list of exempt items, check out this flyer from the state of Louisiana (it downloads as a pdf).
As more states make announcements, I’ll post them here. Expect a short list this year. Last year, Florida announced that it would not have a hurricane preparedness sales tax holiday due to budget constraints – I haven’t heard word yet on whether it will change for this year. Other states hard hit by budget woes in hurricane prone areas include North and South Carolina, and Georgia – I’ll post announcements from those states once I receive them.
Image courtesy of NOAA through Wikimedia
It’s Fix the Tax Code Friday!
Earlier today, I posted a piece on the new ruling in the UK that Pringles, made mostly of things “other than potato” or not, would be considered a snack food that does not meet an exemption for purposes of sales tax/VAT.
In many countries, states and municipalities, foods are exempt from sales tax and other value-added taxes. But as our world changes, as scientific advances occur, as manufacturers and marketers become more creative, our idea of “food” is changing. So what should qualify for an exemption? All foods? Natural foods? Processed foods? What about genetically altered foods? Artificial foods?
So, today’s Fix the Tax Code Friday is a question that the high courts in the UK are struggling with:
What should qualify as “food” for the purposes of a sales tax exemption?
Must there be a natural component? A threshold percentage of natural components? Or must it merely be edible?
