Study says Nevadans pay nation’s 13th highest sales tax rate

CARSON CITY -- A Tax Foundation study released Tuesday found Nevadans pay the 13th-highest rate for state and local sales taxes in the country.

The typical Nevadan pays 7.93 percent in sales taxes. Nevada charges a 6.85 percent state sales tax but allows counties and cities to impose their own sales taxes.

The overall sales tax rate in Clark County is 8.1 percent.

Tennessee imposes the highest total sales tax, 9.45 percent, and Arizona is second at 9.12 percent.

Tuba City, Ariz., with a 13.725 total sales tax rate, imposes the highest state and local sales tax of any city in the United States.

Oregon, Montana and New Hampshire are the lowest-sales-tax states. They have no state sales tax and prevent local governments from establishing sales taxes.

"While state sales taxes are generally easier to understand than the federal income tax system, the existence of thousands of local jurisdictions that set their own rates can lead to confusion," said Tax Foundation economist Scott Drenkard. "States with a moderate statewide rate can end up with an extremely high burden when local rates are added to the total."

The Tax Foundation, based in Washington, D.C., is a nonprofit, nonpartisan organization that has been researching tax issues since 1937.

Gov. Brian Sandoval said Tuesday that the Tax Foundation last year found Nevada had the third-best economic climate for business in the country and that he will have to assess what the latest findings mean.

"We obviously want to have the best climate for business in the country," Sandoval said.

Geoff Lawrence, deputy director of policy for the Nevada Policy Research Institute, said the Tax Foundation findings support a study he recently completed that found Nevada is not a low-taxed state as some politicians have said.

The institute is a conservative think tank based in Las Vegas.

"We are right in the middle on a per capita basis for taxes," he said. "We aren't a low-taxed state."

Lawrence said Tax Foundation studies can be misleading because of what taxes they consider.

The current study is only on sales taxes, he said, not on property or other state and local taxes people pay.

Lawrence added that when the foundation considers the business climate, it only looks at states with actual business income taxes and does not factor in the 1.17 percent modified tax on payrolls that Nevada businesses pay.

"Our modified business tax generates nearly $500 million a biennium," Lawrence said.

Sales taxes also are regressive and tend to be a bigger burden on the poor than the rich, he said.

Because Nevadans actually pay a similar amount of taxes as residents in other states, Lawrence said, there should be adequate money to fund government programs if they are run efficiently.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.