Nearly all states (45 as of 2002) have instituted some type of general sales tax. State
sales tax rates range from 2.9% (Colorado) to 7.25% (California11).
A few states levy a
lower rate on certain goods considered to be necessities, such as food and prescription
drugs. For example, the general sales tax in Illinois is 6.25% but food and drug sales are
taxed at only 1%.
Other states with sales taxes exempt some necessities from taxation
entirely.
In most states, localities can charge a separate sales tax. While local sales taxes
are generally lower than state sales taxes, there are exceptions. In New York the state
sales tax is 4% but local sales taxes are often higher than 4%.
Sales taxes tend to be quite regressive. The reason is that low-income households tend to
spend a larger share of their income on taxable items than high-income households.
Consider Massachusetts – a state with a typical sales tax rate of 5%. According to the
Institute on Taxation and Economic Policy (McIntyre et al., 2003), Massachusetts
households in the lowest income quintile pay about 2% of their total income in state sales
taxes. Meanwhile, those in the top income quintile pay only about 0.8% of their income
in state sales taxes.o, here is an actual study.
http://www.ase.tufts.edu/gdae/Pubs/wp/03-10-Tax_Incidence.pdf