Excise tax, sumptuary tax, or duty is a tax charged indirectly at the federal and state levels, sometimes both, on the sale of specific items.
Excise tax is indirect because the government does not typically charge individuals for the product, instead charging businesses, manufacturers, and producers who can pass these tax payments to customers through their pricing. These taxes are typically levied on items the government doesn’t want you to consume or have in your possession.
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According to various studies done by the Centers for Disease Control and other parties, tobacco kills about 480,000 people per year in the United States. This is more people than suicides, murders, illegal drugs, AIDS, and car accidents combined.
Because of this high number of deaths and of those affected, the United States government rightly seeks to limit its use, and this is why tobacco and tobacco products have a very high tax rate. Additionally, governments at both levels increase this tax every year.
Some revenue from this very high tax is used to fund disease prevention and public health education programs. While there is no federal sales tax for tobacco and tobacco products, these products still attract state and state sales taxes depending on the state.
2. Firearms and Ammunition
Firearms and ammunition are serious equipment that can be fatal in the wrong hands. Because of this, they typically attract very high taxes both on the federal level and the state level. Firearm business owners have to submit local, state, and federal taxes for all gun sales and operating firearm businesses.
At the federal level, revolvers and pistols attract a tax of 10%. Other guns and ammunition carry an 11% tax. On the state level, there are different state sales taxes on different guns and ammunition and these taxes vary depending on the state you are in.
Most states use their state sales and use taxes for these businesses, but some have additional taxes that target guns specifically. These taxes are usually collected from the gun buyer and submitted to the state through the gun shop owners.
All of these taxes can cause the cost of guns and ammunition to be quite high and this is why many people are turning to discount stores for these items. Stores like Bulk Munitions have sizable discounts for anyone who would like to buy the cheapest ammunition and different guns to keep their cost low.
Alcohol, wines, and spirits are another class of products the government wants to control without outright banning them. Even though the tax is already very high, there are movements to increase this tax as a deterrent to drinking.
These movements cite serious results of excessive drinking like vehicular accidents and various diseases and conditions as the reason for wanting alcohol use deterred through a tax increase.
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There have been various movements in recent years to reduce the amount of pollution caused by engines that run on gasoline and diesel. Taxes on vehicles that run on these fuels is as high as it is to reduce pollution and minimize their usage. The revenue collected from the sale of gasoline is used to maintain the transport infrastructure, so many people see it as a necessary tax.
Every gallon of gasoline in the United States attracts a combined federal, state, and an additional tax of 50 cents.
5. Airline Tickets
You might not know that your airline tickets are also heavily taxed. In 2022, domestic tickets attract a tax of about 7.5%. This is separate from a myriad of other taxes that apply to things like luggage.
Some taxes enforced by the federal and state governments are quite high. While some are understandable, such as those for cigarettes and alcohol, there is no reason why things like airline tickets should be taxed so high.