One thing many of us feel we shouldn't have to pay any taxes to purchase is the American flag. Most of us already contribute a good chunk of our incomes in the form of income tax (and other federal taxes) to support our country's government, so it just seems unfair that those who want to display their love for the United States by proudly flying Old Glory should have to shell out even more in taxes to do so. This feeling has fostered a widespread belief that not only are U.S. flag purchases exempt from all sales taxes, but that some manufacturers label them as something other than flags (e.g., "decorative banners"), thus requiring the collection of taxes for their purchase:
A couple years back I went to one of the big box stores to buy an American flag. When I cashed out, they charged me tax. I objected, saying there is NO sales tax on US flags. The cashier got the manager, who was just as ignorant, and said it was in the computer so they had to charge it. I ended up writing the state's attorney general and eventually got my money back, the store was all apologies and IIRC they gave me some extra store credit.
Fast forward to just recently, the wife was at a local garden store and bought a bunch of plants etc. Since our flag was getting ratty looking she bought a new one. When she got home we looked at the receipt and noticed tax was charged. So she called the store and eventually was given to a manager.
Well guess what? This thing is 3 x 5 feet, cloth, red and white stripes, field of blue with white stars, a pole to hang it on etc, etc. BUT!!! The package clearly says "Decorative Banner", NOT US flag. So in a very technical way, they were "correct" in saying tax applies.
Later on we were discussing it and she remarked what she should have said to the guy was "I guess if it's not a flag, I can walk on it, burn it, pee on it or whatever, and since it's 'not a flag' that would be OK?". We probably should have taken it back, asked for our money back and said we wanted an American flag, not a banner.
So for what it's worth, look your flag purchase over carefully, and if you live in a state which has sales tax remember NOT to pay tax on the American flag. And be sure they don't pull some sort of "decorative banner" crap.
Much as we think it should be so, there is no blanket exemption of sales taxes on U.S. flag purchases. Sales taxes are primarily enacted at the state (rather than federal) level, so it's up to each state to set their own policy in that regard.
Some states do exempt American flag purchases from state sales taxes, but only a minority of states (14 in all) have such exemptions in place. Moreover, those exemptions may only apply to a subset of flag sales, such as those made by government organizations or non-profit groups.