Buying Advice Out of State Sales Tax Confusion

[IndyJay]

States with low income taxes, for example, may have lousy public schools, meaning you have to pay for private schools.

Many of the states with highest taxes and most money spent per student have some of the worse school systems.

 

[Torvy]

Tell your FIL to get more data points. I have lived in 4 states as an adult. My experience says he is dead wrong. Besides, we were discussing PA vs TX taxes, not MI.

A gallon of gas has an additional 38.7 cents a gallon tax in PA than TX. 25.12 cents more in MI than TX. Using a modest 15k miles per year and 20 mpg, that is over $188 a year in additional gas taxes in MI and $290 more in PA.

Using median incomes for each state and the IRS standard sales tax deduction rate of 17% of gross income and the median property taxes for each of these states, grand total is Michigan with a tax burden of 8.57%. Pennsylvania with a tax burden of 7.82% and Texas with a tax burden of 4.64%. This is an annual difference of $2671.54 comparing TX and MI. More interestingly, the median Texan earns a whopping $11,531.54 more after these taxes than the average Michigander. Even adjusted for a lower cost of living in Michigan, that would be $8293.61 more per year for the median Texan. Gotta say it...Don't mess with Texas.

 

[zoedog2012]

My FIL had a place in Texas. His message was that, when you look at all the taxes and use fees, it’s about a wash between Texas and his other home in Michigan.

When comparing, you can cherry pick to make one look better or worse, but all in, it takes money to support roadies, fire departments, police, water and sewer systems, and school systems.

States with low income taxes, for example, may have lousy public schools, meaning you have to pay for private schools.

It’s largely a wash.

Just saying...

All states have lousy public schools!

 

[IndyJay]

All states have lousy public schools!

The public schools in my county in Indiana are excellent. True also of the surrounding counties. It has more to do with parent involvement as it does dollars spent.

 

[DB Pilot]

My last new tractor (2020) was supposed to be a Kubota M series. But the Dealer in PA (23 miles away) said I had to pay sales tax even if he delivered it to me in NY. I don't know if it's true but I think he also said that he would then transfer that tax money to NY. I'm happy with my Case 65A purchase locally, in state, 6 miles away. I just figured if I can't get out of paying taxes might as well go for the closer dealer.

Lets see I paid my income tax (Fed., state and local), school tax, property tax, car registration, trailer reg. and license's, fuel plus tax on every thing I purchase. You'd think enough was enough. Guess government never heard the term "double dipping', but I think they have.

 

[IndyJay]

Lets see I paid my income tax (Fed., state and local), school tax, property tax, car registration, trailer reg. and license's, fuel plus tax on every thing I purchase. You'd think enough was enough. Guess government never heard the term "double dipping', but I think they have.

But did you pay your "fair share"?

 

[hornett22]

Tell your FIL to get more data points. I have lived in 4 states as an adult. My experience says he is dead wrong. Besides, we were discussing PA vs TX taxes, not MI.

A gallon of gas has an additional 38.7 cents a gallon tax in PA than TX. 25.12 cents more in MI than TX. Using a modest 15k miles per year and 20 mpg, that is over $188 a year in additional gas taxes in MI and $290 more in PA.

Using median incomes for each state and the IRS standard sales tax deduction rate of 17% of gross income and the median property taxes for each of these states, grand total is Michigan with a tax burden of 8.57%. Pennsylvania with a tax burden of 7.82% and Texas with a tax burden of 4.64%. This is an annual difference of $2671.54 comparing TX and MI. More interestingly, the median Texan earns a whopping $11,531.54 more after these taxes than the average Michigander. Even adjusted for a lower cost of living in Michigan, that would be $8293.61 more per year for the median Texan. Gotta say it...Don't mess with Texas.

Plus there's the savings of your vehicle not rusting out.

 

[jyoutz]

I'm ready to purchase another new tractor from a dealer in PA, I live 150 miles away in MD. We are relatively close on pricing, but I'm now told that if I pick the tractor up there (which I'm ready to do) , I have to pay PA sales tax (even through I'm a MD resident). They further state that If they deliver it to me (~$800) then I have to pay MD sales tax. Does that sound right? has something changed recently?

If I pick the tractor up in PA and pay their sales tax, I may also be liable for my own state's tax when reporting my 2020 Fed/state taxes and effectively pay 2x the sales tax.

I've purchased many vehicles, tractors, etc. out of state, and worst case on a 'registered/tagged' vehicle they collect MD sales tax and remit on my behalf to my state. Best case, on an item that is not 'registered', they collect zero tax.

??

thanks

I think this varies by state. I live in NM and recently purchased a tractor in southern, Colorado close to the state line. I was told that because I’m not a CO resident, they couldn’t charge me any sales tax. I was also looking at a local dealer and would have to pay a 7% sales tax. I didn’t buy locally because they didn’t have the tractor model I wanted in stock. I also checked with a dealer in TX and was told that I would have to pay sales tax even if I wasn’t a TX resident. So very confusing. Since I bought with the CO dealer, I paid no tax. I also bought a vehicle in CO a few years ago and paid no CO tax, but did pay NM tax when I registered the vehicle license. Because tractors aren’t registered, I don’t know how I would even pay NM sales tax.

 

[jyoutz]

Plus there's the savings of your vehicle not rusting out.

Texas is known to get their revenue in different ways, but they still collect a lot of funds from residents. They have a lot of various user fees and very high property taxes and also local sales tax is far higher than my state. Also, many of their roads are toll roads.

 

[jyoutz]

All states have lousy public schools!

Not true. It varies by school district.