West Virginia became the first state to enact a sales tax on 03 May 1921. It would go into effect on 01 July 1921.
Georgia followed in 1929; Mississippi, in 1930. Between 1932 and 1937, 30 states enacted retail sales taxes, starting with a new form that Mississippi introduced in 1932.
The retail taxes of the thirties applied essentially to sales of tangible personal property. Sales of consumer services were excluded from coverage. On the other hand, sales of production machinery and equipment fell within the scope of the early taxes.
Today, 45 states and the District of Columbia collect statewide sales taxes. The five states that do not are Alaska, Delaware, Montana, New Hampshire and Oregon.
Researchers have identified how governments and rulers have used taxes to raise funds going back in time to 2000BC.
Taxes and the Internet
On 21 June 2018, the Supreme Court ruled (5-4) in South Dakota v. Wayfair, Inc. that South Dakota could require out-of-state internet retailers to collect its sales tax on resident purchases.
The largest online retailer, Amazon.com, had collected sales taxes nationwide since 2014, and shortly after the decision, rival Overstock.com said it would do so as well.
That Court decision overruled two cases that had limited state sales tax collection to those businesses with a physical presence, National Bellas Hess, Inc. v. Illinois Department of Revenue (1967) and Quill Corp. v. North Dakota (1992).
More than just about a South Dakota law, the case involved weighty and long unsettled questions such as due process limitations on jurisdiction, the proper roles of Congress and the courts in enforcing limitations on state actions taxing or regulating interstate commerce, the standard by which the Supreme Court should overrule prior decisions, the thorny question of state regulations that impact producers in other states, and how (or whether) to tax activities that happen everywhere and nowhere in the cloud or on the internet.
In 2016, President Barack Obama signed the Trade Facilitation and Trade Enforcement Act of 2015. It “bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes.”