Race to the top

We have the highest average sales tax and the third highest sales tax on food in the country. From The Chattanooga Times Free Press.

Tennessee has highest average sales tax
Tennessee shoppers continue to pay the highest average sales taxes in the nation, according to a report issued by the Tax Foundation.

The Washington-based, nonpartisan tax research organization said the statewide average state and local sales tax burden in Tennessee is 9.43 percent for every dollar spent on taxable items.

Tennessee is in a five-way tie with Indiana, Mississippi, New Jersey and Rhode Island for the highest state sales tax rate -- 7 percent.

But local governments' ability to add up to 2.75 percent catapults the Volunteer State into the No. 1 position in terms of state and local sales burden, the foundation analysis found.

Just south of Chattanooga, the burden is far lower. Alabama ranks sixth with a state sales tax of 4 percent and local option taxes of up to 4.64 percent -- a combined rate of up to 8.64 percent.
Georgia came in at No. 23 with a state rate at 4 percent and local options of up to 2.87 percent for a combined rate of 6.87 percent.

Some local jurisdictions in other parts of the country have a higher combined sales tax rate than Tennessee. Tuba City, Ariz., ranks No. 1 nationally with 13.725 percent. That's a combination of Arizona's 6.6 percent state sales tax, a 6 percent local government tax and 1.125 percent county tax, the Tax Foundation analysis found.

While Tennessee's combined sales taxes rank No. 1, its overall average state and local tax burdens rank favorably, according to the Tax Foundation report.

Tennessee residents live in a state that has the 47th lowest overall state and local tax burden -- 7.6 percent or the third lowest nationally -- according to another Tax Foundation report.

Tennessee has no general personal income tax although it does have a 6 percent tax on certain interest and dividend income as well as a 6.5 corporate income tax.

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