Quote:
Originally Posted by Kumabjorn
Does that then imply that the distributor in either CT or MA has to charge the retailer in RI the sales tax for their respective states? If so, is that then detuctible for the retailer when he collects sales tax from RI customers?
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No.
Sales taxes (and use taxes) are consumption taxes, not value-added taxes. (There is no stacking of taxes as products change hands or cross localities.)
Sales taxes only apply at the retail site so the retailer in RI owes nothing to the state where the distributor operates. The consumer only owes the state he/she lives in or, for travelers, the state where they were physically present during the transaction.
The system evolved over two hundred years to prevent state protectionism; states applying duties or taxes to out-of-state vendors/customers. Some states still try--wine sales, for example--but in general the Congress frowns on attempts to hamper or regulate interstate commerce because that is the domain of the Congress itself. (How far that power goes is currently under litigation.)
The US, btw, is *not* a federation. It is a unitary republic with multi-level power/responsability distribution.
(Historically it started out as a loose confederation that failed, was replaced by a federated state, and since then has seen the central government acquire ever more power, especially since the Civil War of the 19th century settled once and for all that "The US *is*" rather than "The US *are*".
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If it seems inefficient it is because the system was designed on purpose to hamper government's ability to control the citizenry. Less intentional is the citizenry's difficulty controlling the (Federal) Government.