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Dan
 
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Why is there sales tax on used goods?

You buy an item brand new from a retail store and pay the state sales tax
You then sell the item (lets say several years later) to another individual and (theoretically) must collect sales tax for that item again
Then lets say the item ends up at a thrift store, more sales tax is collected
Then another individual could sell it....on and on, etc etc


Shouldn't the state only get paid once for the item and not double dip into an infinite void of tax collection?

Last edited by Dan; 04-15-2008 at 10:33 AM..
Old 04-15-2008, 10:22 AM Dan is offline  
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MrMaN383
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i agree with you
Old 04-15-2008, 10:27 AM MrMaN383 is offline  
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HybridPyro
 
Yes the government should only get one it once but it rarely works that way. The government will always get their money. The rules on this probably vary slightly depending on area.

Up here for example used cars were subject to provincial sales tax, but now the new government eliminated tax on used cars much to the joy of consumers!
Old 04-15-2008, 10:29 AM HybridPyro is offline  
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guns&cigarettes
 
Why do you think taxes are/should be fair?
Old 04-15-2008, 10:42 AM guns&cigarettes is offline  
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DHermit
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Lol I thought of this last night when I was trying to sleep, weird that you make this same post today. I agree with you.
Old 04-15-2008, 10:55 AM DHermit is offline  
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cromicus
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The only places I've heard of that charge sales tax on the sale of used goods are some U.S. states. This doesn't happen with European VATs, Canada's GST, etc. The FairTax proposal also would not tax secondary sales.
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Old 04-15-2008, 11:28 AM cromicus is offline  
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mathlete
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No you don't. My mom runs a consignment clothing store and doesn't charge tax on any of it. This is in Illinois, btw.

At the same time, she has a tax ID so that she can buy things tax free if she intends to sell them (taxed).
Old 04-15-2008, 11:29 AM mathlete is offline  
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cromicus
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Quote:
Originally Posted by Dan View Post
Shouldn't the state only get paid once for the item and not double dip into an infinite void of tax collection?
It wouldn't be infinite, because eventually the good wears out and isn't useful to anyone and is just discarded. Cars would be the most durable personal property, but I would expect this to happen only within 4-5 transfers. Aircraft might change hands a lot, but business-to-business sales are usually tax exempt (although not on most PSTs in Canada) for commercial purchases, and aircraft might be exempt in any event.

But you could say the same thing about any transaction cost: e.g. every time a house is sold, you have to pay a lawyer $500 (or whatever) to settle it.
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Old 04-15-2008, 11:46 AM cromicus is offline  
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TheRequiem
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Also the state is only earning a single sales tax, in the end. It's just getting passed down the line in chunks to the final owner.

You pay the biggest chunk because it depreciates most at the start. But then you resell, the sales tax you collect is reimbursing you for the sales tax you paid before.

I think. I'm not an accountant, though.
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Old 04-15-2008, 01:17 PM TheRequiem is offline  
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Dan
 
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But then you resell, the sales tax you collect is reimbursing you for the sales tax you paid before.

No thats not correct. Sales tax never goes to you, it goes to the state. The first time the item is sold the state gets it, the 2nd time its sold the state gets it in addition to what they got before
Old 04-15-2008, 01:22 PM Dan is offline  
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JRD4zc
 
Under the FairTax there would be no sales tax on used goods... FairTax FTW
Old 04-15-2008, 01:54 PM JRD4zc is offline  
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emx599
 
Here in Texas they have even changed the sales tax on used cars. A few years ago you could go to the DMV and tell them you paid less than you did and they would charge you a tax based on the number you gave them. Too many idiots told them the car was worth $1. Now they look up the market value for your car and charge you tax on that. It doesnt matter if you bought a miata with a ruined soft top, ruined interior and a blow engine for $100. You are going to pay the taxes on what an average looking and running car for that year goes for. Even if a parent "sells" their car to their kid for $1 just so they can have it in their name they pay the taxes for what the car would be sold for normally. Total BS if you ask me.
Old 04-15-2008, 02:31 PM emx599 is offline  
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TheRequiem
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Quote:
Originally Posted by Dan View Post
No thats not correct. Sales tax never goes to you, it goes to the state. The first time the item is sold the state gets it, the 2nd time its sold the state gets it in addition to what they got before

Well that sucks. :/
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Old 04-15-2008, 02:33 PM TheRequiem is offline  
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ad hoc
 
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Here in Texas they have even changed the sales tax on used cars. A few years ago you could go to the DMV and tell them you paid less than you did and they would charge you a tax based on the number you gave them. Too many idiots told them the car was worth $1. Now they look up the market value for your car and charge you tax on that. It doesnt matter if you bought a miata with a ruined soft top, ruined interior and a blow engine for $100. You are going to pay the taxes on what an average looking and running car for that year goes for. Even if a parent "sells" their car to their kid for $1 just so they can have it in their name they pay the taxes for what the car would be sold for normally. Total BS if you ask me.

yeah that change sucked. But I used that system before the change. I bought a used car for $4k, told em I paid 2.5. Not a huge difference but it helped at the time.
Old 04-15-2008, 02:42 PM ad hoc is offline  
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holmgren
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Quote:
Originally Posted by DHermit View Post
Lol I thought of this last night when I was trying to sleep, weird that you make this same post today. I agree with you.


Apparently us genmayers have the same mind. I was thinking about this a couple of days ago with my buddies while drinking, haha. I completely agree too.
Old 04-15-2008, 03:06 PM holmgren is offline  
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