Question

a) What, exactly, is the “State Income Tax (SIT)? What are the various tax rates in the SIT? Roughly, at what income level does each rate ‘kick in’? b)Please define the “sales” tax and give me an example of the sales tax and how it applies in a typical transaction. c) Please define “special taxes and fees” , and give an example of how they impact the typical household. d) How would you improve any or all of these taxes and fees?

Answer 1

a)State income tax is imposed on the taxable income of individuals,corporations , estates and trusts at a fixed or  graduated rate and also the rates are different in different states.There are various tax rates in state income tax.California, Hawaii ,Oregon , Minnesota , New Jersey have highest state income tax rates in the country.Again there are seven states like Alaska, Florida, Nevada etc which have no tax on income.Nine states like Colorado, Illinois , Kentucy etc have flat rate ie everyone pays the same rate irrespective of income they earn.Structure of the tax is progressive ie those who earn more will pay a higher percentage.California's highest rtae is 13.3% if income is more than $1 million.In Alabama higherst rate of 2%to 5% on income above $3000, Arakansas rate 0.6 to 6.9 and the  highest rate applies to income over $37. 200. etc .

b)Sales tax is levied by the government on the consumption of goods and services by the customer.The government earns revenue from the percentage of sales tax added to the product or service. For eg sales tax in Michigan is 6%. If the cost of a book is $30 , sales tax on the book is $1.80. To calculate sales tax the price of the product is multiplied by the tax rate.Here in the eg$30*6=1.80

c)Tax and fee are30 special programs which are administered by the business tax and fee division on a wide range of activities as well as on transactions . The revenue collected goes to the state general funds for  state services like highway construction , various recycling programs etc Egs of tax and fee are alcohol tax, diesel fuel tax, tobacco product tax .etc.Typical households get impacted because the disposable income with the households becomes less.

d)I would try to improve by asking for two thirds vote of the electorate before leving special taxes and fees.