Report: Tennesseans Pay Nation's Highest Sales Taxes

Aug 28, 2013


MURFREESBORO, Tenn. (WMOT)  --  A new report says Tennesseans pay the nation’s highest sales taxes.

The Washington DC based Tax Foundation, a nonpartisan fiscal policy research group, says Tennessee’s combined sales tax burden stands at 9.4 percent. That figure does not include the state’s 5 percent tax on groceries.

Unlike many states, Tennesseans do not pay a personal income tax. Foundation spokesman Scott Drenkard says most economist believe Tennessee’s reliance on a consumption tax is the best way to fund state government.

Drenkard notes, however, that many of Tennessee’s neighboring states have significantly lower sales taxes.

“There is such a thing as sales tax leakage, which means that consumers are liable to go to other states to make sometimes major purchases, sometimes just specific purchases – people will make their purchases in other state to avoid high tax burdens.”

Arkansas, Louisiana, Washington, and Oklahoma join Tennessee on the list of states with the highest sales taxes. The Foundation report says Alaska, Hawaii, Maine, and Wisconsin enjoy the nation’s lowest sales taxes.