State LST Laws: A Comprehensive Analysis of the Laws Governing Local Sales Taxes

Abstract

Local sales taxes (LSTs) have received growing attention over the past decade, but a fundamental aspect of LSTs has remained largely unexplored: How do state laws governing LSTs differ from one another? The literature acknowledges that state laws vary widely, but leaves the discussion at that. This research seeks to fill that void by presenting a comprehensive set of state LST laws and creating a resource that will enable researchers to consider these differences in their analyses. State LST laws are framed within the lenses of jurisdictional eligibility and discretionary authority.

The Impact of the Amazon Tax on Local Sales Tax Revenue in Urban and Rural Jurisdictions

“…The burden is further exacerbated by the policies of local governments, which in some states can set their own sales taxes, often with their own rates and tax bases. Furthermore, practices vary among states as to whether the state or local jurisdiction collects the sales taxes—and may even vary within a given state (Afonso ).…”

“…All of North Carolina's 100 counties have a combined sales tax rate of between 6.75 and 7.5 percent. Table presents the five “articles” which is how the state of North Carolina refers to the available LST instruments that can be imposed (Afonso ). Only Article 39 revenue is used in the analysis and all counties had adopted Article 39 before 2011.…”

“…South Carolina's LST laws share some important features with those of North Carolina. The LST is at the county level and the revenue is shared between the counties and municipalities; the distribution of some of the revenue is on a per capita basis (Afonso ). This analysis uses the revenue from the LSTs authorized under 4‐10‐10 with a flat rate of one percent.…”

“…This factor eliminated states like Alabama where some counties collect their own LSTs and the state collects it for others. For more details on LST policies in the 50 states, see Afonso ().…”

In the Shadow of State Government: Changes in Municipal Spending After Two Recessions

“…The third state contextual variable is a dummy variable that indicates whether the state does not allow municipal governments to levy a general sales or income tax. In this case, a value of one for the variable shows whether the government has access only to property taxes and was constructed using documentation of local sales tax privileges by state by Afonso (2017) and local income tax privileges by Sjoquist and Stoycheva (2012). Similar to TELs, own-source revenue diversification will be much less in governments that are constrained to levying only property taxes, not sales or income taxes, and they will be more constrained from increasing taxes during periods of fiscal stress.…”