One of the “joys” of becoming an adult is paying taxes. Since tax date is fast approaching, I thought this would be a good time to share some interesting information about taxes in the U.S.
Revenue Streams
Though not without various types of taxes (property, excise, poll, etc.), the American colonies were better off than Great Britain. It needed money to pay debts incurred from several wars, so it began to tax the colonies for some much-needed revenue. The tax struggles that followed, especially taxation without representation, led to the American Revolution and the development of the legislative system we know today.
When the colonies became their own country, the main source of tax revenue came from tariffs. It wasn’t until 1913 that declining tariff revenues led to the ratification of the 16th Amendment. This amendment gave Congress the power to tax all types of income, both individuals and businesses.
Did You Know . . . Income Tax
- The U.S. Federal Government’s main source of money, since 1950, comes from individuals’ income taxes.
- In 2023, there are only seven states without any type of state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming.
Sales Tax
The amount and type of taxes you pay will depend on where you live. Local and state governments use a variety of taxes to bring in revenue. One of those revenue streams is from sales tax. The first type of state sales tax—a mercantile license tax—started in Pennsylvania in 1821. Mississippi established the first true sales tax in 1930, and other states quickly followed its lead. But how certain items are categorized and taxed can be . . . strange. Bottom line, if the government sees an opportunity to collect taxes, they usually take it, regardless of how strange it may be.
Did You Know . . . Sales Tax
- Alabama taxed all decks of playing cards purchased in the state. (This tax was suspended in 2015.) On the other hand, the state of Nevada gives you a free deck of cards when you file your taxes.
- Arizona taxes blocks of ice.
- Arkansas taxes tattoos and body piercings.
- California imposes high taxes on items purchased in vending machines, including fruit. (If you want fruit, buy it at the grocery store.)
- Colorado doesn’t consider liquor-filled candy a food, and so it’s subject to sales tax.
- Kansas taxes tethered hot air balloon rides as amusement rides. Untethered rides are considered air transportation so aren’t taxed.
- In Illinois, candies that use flour (Twix, etc.) fall into the “food” column and are taxed regularly. Candies that don’t use flour (hard candies and suckers) fall into the “candy” column and are taxed at an additional rate.
- In Indiana marshmallows (considered candy) fall under a candy tax, but marshmallow cream (not considered candy) doesn’t.
- Maine controls the production of their wild blueberries with a special blueberry tax.
- Maryland imposes a “toilet flush tax” (or the “Chesapeake Bay Restoration Fee”), costing state residents about $60/year.
- Beginning in 1821, Missouri annually taxed single men (ages 21-50) one dollar. This “bachelor tax” encouraged them to marry. (Though rarely enforced, this law is still technically on the books today.)
- If you’re over one hundred years old and not someone’s dependent, you’re tax-exempt in New Mexico.
- Gray squirrels were once numerous in Ohio. An 1807 law, created to help reduce their numbers, required taxpayers to include a quota of squirrel scalps with their tax payment. (The number of scalps was in proportion to their county levies and within a certain limit, of course.)
- There’s an extra tax on belt buckles purchased in Texas. Belt buckles are considered accessories, not essential clothing.
- If you want to go dancing on your next vacation, skip visiting Washington State. This state has a dance tax. (Though the tax was repealed in 2013, the repeal expired in 2017.)
Future Possible Tax…
Unless you’ve been living under a rock, you’re aware the government is acting more like your mother every day. One tax not yet in effect, but one multiple professionals are calling for, is a tax on unhealthy foods. If they get their way, one day soon you might see sales tax on fast food, chips, cola, candy, etc. go up by ten percent or more. The idea is to prevent the annual increase of diabetes cases.