Question

Compare and Contrast How do sales taxes differ from income taxes?

Answer 1

The Differences Between Income Tax and Sales Tax.

Sales tax is a pass-through tax levied on a transaction, whereas income tax is a direct tax paid by individuals on their income.

Individuals are subject to both federal and state income taxes, unless they are fortunate enough to reside in a state that is tax-free. Consumers who live in states with a sales tax must pay it to retailers at the point of sale. Sales tax is exclusively managed at the state level. In return, businesses provide the state the sales tax they have collected.

In general, income-earners must deal with income tax; only those who sell specified goods or services must deal with the collection and remittance of sales tax to the state.

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