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![handle is hein.taxfoundation/ffcjgxz0001 and id is 1 raw text is: April IjIh, 2012 sa]Fc
No. 296
Sales Tax Rates in Major U.S. Cities
By
Scott Drenkard, Alex Raut, and Kevin Duncan
Executive Summary
Sales taxes in the United States are levied not only by state governments but also by city, county, special district, and
Native American governments. In many cases these local sales taxes can have a profound impact on the total rate that
consumers see at the check-out register.
Several private firms maintain databases of the sales tax rates in the 9,600 local jurisdictions in the United States that
levy them. Here, we list the combined state and local sales tax rates in major U.S. cities, defined as all U.S. Census-
designated incorporated places with a population over 200,000. This report complements our annual calculation of
the average of all local sales taxes in each state.'
Highest and Lowest Sales Taxes Among Major Cities
Birmingham and Montgomery, both in Alabama, have the highest combined state and local sales tax rate among
major U.S. cities at 10 percent. They are followed by Chicago, Illinois; Glendale, Arizona; and Seattle, Washington,
each with rates of 9.5 percent.
Portland, Oregon and Anchorage, Alaska have neither a state nor local sales tax. Honolulu, Hawaii has the third
lowest sales tax among major cities with a rate of 4.5 percent; however, Hawaii's overly broad sales tax makes this not
strictly comparable with other states. Five local jurisdictions in Virginia (Arlington, Chesapeake, Norfolk,
Richmond, and Virginia Beach) are also relatively low on the list, levying just a 5 percent statewide sales tax.
The Role of Competition in Sales Tax
Evasion of sales tax is most likely to occur in areas where there is a significant difference between two jurisdictions'
sales tax rates. Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax
areas, such as from cities to suburbs.2 For example, strong evidence exists that Chicago-area consumers make major
1 See Scott Drenkard, State c Local Sales Taxes in 2012, Tax Foundation Fiscal Fact No. 291, Feb. 14, 2012, at
http://www.taxfoundation.orglnewslshowl27967.html.
2 Mehmet Serkan Tosun & Mark Skidmore, Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West
Virginia (Working Paper, 2005), available at http://www.rri .wvu.edulpdffileslTosunwp2OO5-7.pdf. See also Randolph T. Beard,
Paula A. Gant, Richard P. Saba, Border-Grossing Sales, Tax Avoidance, and State Tax Policies: An Application to Alcohol,
Southern Economic Journal, 64(1), 293-306 (1997).
Scott Drenkard is an economist at the Tax Foundation; Alex Raut and Kevin Duncan are policy interns at the Tax Foundation.](ViewImageLocal?handle=hein.taxfoundation/ffcjgxz0001&div=1&collection=&method=preview&ext=.png&size=3)