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	Tax Sales Tax   Property Taxation: Depreciation Taxation of Profit Adjusted Basis Home Mortgage Interest and Points Deduction   1031 EXCHANGES Capital Gains Tax Corporate Tax Corporation Dividend Tax Double Taxation European Union Savings Taxation Homeowners exemption Foreign Investment in Real Property Tax Act. Flat Tax Principles of Income Tax Income taxes Inheritance Tax Installment Sales Poll Tax Progressive Tax Property taxes California Propositions Purposes and Effects of Taxation Retirement Tax Sales Tax Sales leaseback Tariff Tax Credit, Exemption Equivalent and Tax Tax Rates Tax Treaty Direct and Indirect Taxation Value Added Tax A sales tax is a tax levied on consumption of some sort. It is normally a certain percentage that is added onto the price of goods or a service that is purchased. Ideally a sales tax is not charged more than once on any one item. A conventional or retail sales tax attempts to achieve this by charging the tax only on retail transactions, and businesses buying raw materials for production or finished goods for resale are not charged. This prevents the so-called tax cascading effect in which an item is taxed more than once as it makes its way from production to final retail sale, until and unless more than one retail agent decides to take his commission per transaction. Value-added tax or VAT is a related type of tax; this is a system in which all businesses remit the taxes on their sales, but they are also refunded the amount of VAT remitted by their suppliers. In addition to the advantage of avoiding tax cascading, under VAT there is no requirement for the government to determine which sales are taxable and which are not, since all kinds of sales - retail and wholesale, are taxed. Sales taxes are generally regressive, which implies that the poorer people tend to pay a greater percentage of their income in sales tax as compared to richer people, because they tend to spend a far higher percentage of their income. In certain locations, items such as food, clothing, or prescription drugs are exempted from sales taxes purposefully in order to relax the burden on the poor. Some of these exemptions (such as exemptions for clothing or prescription drugs) actually tend to make the tax more regressive, since poorer individuals may spend a smaller percentage of their incomes on these items as  compared to their richer counterparts.