One way or another, higher taxes are coming to sop up the red ink leaking from the budgets of states, cities, and municipalities.
And the tax of choice lately has been the sales tax.
Seven states and the District of Columbia increased their sales taxes in 2009, according to Berwyn-based Vertex Inc., a software company that helps retailers and other businesses manage their tax reporting.
That was the highest number of states passing increases since Vertex began tracking changes in sales taxes in 1982. North Carolina raised its rate twice, going from 4.5 percent to 5.75 percent.
In all, Vertex counted 850 changes in sales taxes in 2009 by states, counties, cities, and small specialized districts, such as those created to support mass transit or libraries. That’s down from the 1,048 recorded during 2008, but the highest since 2003, when there were 954 changes in sales taxes.
All that activity is keeping Vertex and 600 employees humming. Vertex has 85 people in its tax-research department dedicated to working their contacts to update rule and rate changes monthly, said John Minassian, its vice president of tax content development.
“I tend to be sympathetic to our customer base,” Minassian said, noting that there are 8,000 taxing jurisdictions in the United States. “The complexity of the changes is mind-boggling.”
So far in 2010, Vertex is seeing proposals for higher sales taxes in Arizona, Maine, New Mexico, and Washington. In Pennsylvania, Gov. Rendell has proposed cutting the state sales tax to 4 percent from 6 percent, but broadening its base to cover more things, including accounting, legal, and engineering services.
Add Pennsylvania’s current 6 percent sales tax to Philadelphia’s 2 percent sales tax and the resulting 8 percent levy sounds high, right? Well, Philadelphia is actually below the national average of 8.629 percent for 2009, Vertex said.
The place with the highest combined sales tax rate is Arab, Ala., about 25 miles from Huntsville. The 7,200 residents of the town pay a sales tax of 12 percent, according to Vertex.
Still, I don’t think that fact will help Mayor Nutter sell his 2-cents-per-ounce tax on sugary drinks.
Taxpayers tend to fight any tax increase as well as any cuts in spending. But, as Minassian said, “something’s got to give.”