Civic · 6 pages · 12 min

How a sales tax differs from an income tax

A sales tax attaches to taxable purchases, while an income tax attaches to income measured over a period.

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From the opening

A sales tax takes a portion of a taxable transaction, usually at the moment a covered good or service is sold to the buyer. An income tax takes a portion of income as the statute defines it over a period such as a year, and it does not turn on whether that income was later spent. The opening covers a purchase is not a year's pay, sellers usually remit the sales tax, and use tax stays on consumption.

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Inside

A purchase is not a year's pay
Sellers usually remit the sales tax
Use tax stays on consumption
Each statute exempts different things
Where the idea stops applying
A distinction worth keeping

Sources

Retail sales tax base
Income tax on a periodic base

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How a sales tax differs from an income tax

From the opening

Inside

Sources

Also on the desk