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QUESTION:  How do local sales, use, and value added taxes affect ERI cost-of-living differentials calculations?

 

The Geographic Assessor database calculations incorporate local sales, use, and value added tax differentials within the calculations for consumables costs, automobile care, home maintenance, health care products, etc.  Please note that in some cases, the effect of local taxes is net zero, in that wholesale and retail chains charge slightly less for products in high sales and use tax areas and slightly more in areas with no or low sales tax.  Many employees are concerned about local differentials in sales tax rates, but the truth is, this particular research category has very little effect on overall cost-of-living differentials.

 

Occasionally, employees may confuse sales tax with income tax.  The income tax field does not incorporate sales tax data.

 

Please note: ERI estimates are not intended as substitution for legal counsel.  All tax planning should be assisted by the expertise of an international tax consultant.

 

See Two City Comparison - Background for more information.