My Love-Hate relationship with Sales Tax in the United States

There are obviously two certainties in life, and if you do not know I will spell it out to you DEATH and TAXES. Death is inevitable, and also it happens at the later stage of life or maybe not, people die young. Better put, it is the final straw and that is when we cease to exist. Yes, Death is a certainty but unless you have a terminal illness it doesn’t loom over your head and neither is it a part of your everyday life. Taxes are! When I lived in Nigeria, it wasn’t so much, I paid taxes indirectly, it was never real to me, deduction is at source. Here, it is as REAL as REAL can get. Sales tax definitely is

The fact that Taxes are inevitable was one of the reasons that drew me to studying tax law, that and the fact that tax lawyers will always be in demand. I took all the tax classes in my undergraduate class. The fact that taxes in Nigeria were pretty straightforward helped, at least that was what I thought. In school, there weren’t as much case law, it was relatively easy. Fast forward 5 years, I am specializing in Tax Law in the U.S. I really wouldn’t see me do anything else but, it is more challenging than I thought it would be.

Taxes are everything here. Its also not just about the law, it is largely about policy. There is a policy reason for everything. Lawmakers here use the law to shape morals. I could use the taxes I pay on buying a bottle of alcohol to buy 3 mixers no jokes. Sales Tax is what gets me and which I pay almost on a daily basis. I should not be saying this but I HATE SALES tax, it’s funny that this was my favorite tax class but the part where I pay the tax, annoys me.

My first encounter with Sales Tax was not in a class as you might have thought. It was a real life situation. I just got here and wanted to go shopping. I was told about a few retail shops where I could get affordable deals and bargain. It turned out to be not so affordable for my Naira converted dollars. Anyways, that’s not the point. As I usually do when shopping obviously because I am not rich yet, I have a mental calculation of what I pick and how much it would cost at check out and be sure everything fits in my budget.

Sales Tax

Little did I know, I got to the counter and Voila! Bill was 8% more than I anticipated.  The amount might not have been a lot for Americans or people who work here but it was a lot for me. Just a bit of background and to put things in perspective. In Nigeria and most European countries, we use the VAT system, tax is levied at every step of the transaction but it is in built, in tax terms, it is indirect. I know I am buying a product and paying tax but the tax is not in my face. Unless i take a look at the receipt which  has the itemization. I have no clue how much tax I paid. What I see is what I get, if the product says 2,ooo naira on the shelve, I pay 2,000 naira at the counter. Now, having to do calculations before getting into the counter makes my head hurt.

Also, I love to travel and the rates differ from each state, some localities and cities also impose sales taxes. It’s interesting and annoying at the same time. One month here and I had been to New Jersey, Georgia, Texas, New York and District of Columbia, Maryland Virginia and have paid varying rates in state taxes. I live, school and work in the DMV area and tax planning have literally become a part of my life. I know to buy my groceries in District of Columbia and never ever buy alcohol in Virginia but instead in Maryland.

This is a hassle but what can I do when uniformity is not existent. Plus it will take a lot of getting used to. I still get caught my marketing gimmicks. Price is always more than advertised at the end of the day. You never know the exact price until you get to the counter. I wish the rates that  certainty that comes with paying taxes could be as the rates that come with it.

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  • Reply Fisayo Adeleke February 23, 2020 at 7:16 pm

    I’m a tax consultant and I still don’t understand most of it tbh..especially sales tax… im just like abeg leave me where I am…lol…I decided to go with transfer pricing instead, at least that one is almost uniform everywhere.

    • AE
      Reply AE February 25, 2020 at 8:25 pm

      Lol…It’s pretty easy. Sales Taxes and VAT are transaction taxes. In most countries, once a purchase is made, there is an obligation to pay tax. Either on the buyer or seller depending on the laws. Some countries also charge these taxes on provision of service.

  • Reply Ridwan February 25, 2020 at 7:22 am

    What an experience!

    • AE
      Reply AE February 25, 2020 at 8:25 pm

      It constantly blows my mind

  • Reply Chioma March 4, 2020 at 7:03 pm

    Oh wow, this is so interesting. Didn’t know that’s how things work in the US. I agree with you, I prefer the Nigerian/European VAT system. No extra calculations or pressure at the counter.

    • AE
      Reply AE March 5, 2020 at 8:17 pm

      Lol..Thats the word. No extra pressure

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