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Income Tax AND Sales Tax
When you earn a dollar, you pay the State of CO tax on that dollar. When you spend that same dollar, you pay the State of CO tax on that dollar again.
Being from Texas, where there is sales tax but no income tax, and having only lived in Colorado for four years, I still do not understand how this double-dipping by the State is fine with everyone. Can someone clue me in?
When you pay a fine, fee, or ticket to the government, you pay taxes on it so the government can take a share of a financial transaction. Why does the government need a share of a payment being made directly to them?
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Great question, Irving. I'd like to know the answer to that as well.
Sales taxes paid can be taken as an income tax deduction in many cases. This is why an accountant is worth the money. H&R Block, etc. Often overlook this type of deduction. You also need to have good records of exactly how much sales tax you paid (Quicken, Quickbooks, or similar).
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The sales tax you're paying is paid on behalf of the merchants you're buying from. They have to pay taxes on the goods (not services!) they've sold you, but they pass the privilege on to you. They also have to pay employer taxes, some states have corporate taxes (CA, for instance, has a mandatory $800 annual tax no matter what your annual revenue is).
My memory now starts to get a bit fuzzy, but perhaps depending on the size of their sales receipts, the merchants have to deposit the sales tax collected weekly/monthly/yearly.
Basically, everything is taxed, and everybody and their mother looks for a way to punt those taxes on to someone else.
As TFogger said above, Sales Tax is a line item on your Sch A Itemized Deductions on your federal 1040, but you really have to pay a ridiculous amount of sales tax for it to make a difference on pg2 of your 1040. The standard deduction (you typically only itemize if you pay property taxes or mortgage interest on a house) already figures the state sales tax that you've paid during the year.
Disclaimer: IMO The current Federal and State taxation is absolutely ridiculous and it favors the rich who can afford expensive accountants to figure out the tax code. I think that if the country's average citizen cannot understand the tax he/she must pay, you shouldn't make them pay it. I'm sure there's faults in that logic, but come on, look at this link: http://www.irs.gov/pub/irs-pdf/i1040sca.pdf Go to page 4. This is just for 1 damn line on one of many sub-sections of an individual tax return. Figure out a flat tax for Every working citizen. Guess what, government? There's your yearly revenue from the people. That's all you get to spend.
They see it as free money when its passed from one person to another. And they like to take their piece whenever they can. I don't understand sales tax being charged on cigarettes @ $40 when 75% is taxes already. If only we could get that kind of freebies. Buy 25 bullets get 75 for free then add .0762% more bullets on top of it at the register.
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its just another way to pay, or attempt to pay the state's bills.Originally Posted by Teufelhund
every state has a unique combination of sales tax %, property tax rates, income tax %, ect.
I'm orignally from Colorado and moving to Texas. I gave up trying to figure out why I have to buy a "membership" at some bars/towns to drink... its just a form of taxation to help Texas pay the bills.
flat tax on sales is the only correct way to be taxed
Every state does property tax (I think), but most states have either income tax OR sales tax, but not typically both. Is there another state besides CO that does both?
Welcome to the bible belt BTW. I see you're near Dallas. I grew up near Galveston, but I lived in Plano for about 7 years before moving to CO. Have a great time in the triple digit heat and 100% humidity!
im too lazy to do much research on it, but this site has a few maps that show some tax rates differences.
http://www.mymoneyblog.com/state-tax...e-compare.html
i cant wait. we are jumpin in feet first for a drastic change. we didn't want to live in one area our entire life.
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