The freight tax is a fee that is placed on the freight that is being sent to a particular location. For freight that is sent to a location, the freight tax is a percentage of the total amount of freight that is shipped. This tax is paid by a freight shipper. When freight is shipped, the shipper will have a freight tax number, which is usually printed on the label of the package that is shipped.
This is important because freight is generally taxed at a flat rate (with a minimum of $500) per package. At the same time, freight is often also taxed per car, with the tax being levied on the total amount of freight that’s being shipped in a given shipment. So if you ship five cars of freight, you can get a tax of $500 per car. But if you ship three cars, you can get a tax of $250 per car.
This is a common misconception. Most freight is not taxed per car, it is taxed on the total amount of freight shipped in a given shipment. This is the most common misconception, but I think it’s a little misleading because it does not match the tax structure of freight shipping companies.
If you ship 5 cars of freight, and you pay $300 for shipping, the freight tax will be $100 (5+5). If you ship 3 cars, and you pay $300 for shipping, the freight tax will be $75 (3+3). If you are shipping five cars, you will get a tax of $500. So what you are paying is $300+ $100 = $500, which is the same as shipping three cars, $300.
The tax structure is more complicated than this, however. Freight carriers have to pay a different tax for each different weight of a car to be shipped (which isn’t always the case for ships). This is why you have to pay more for shipping 5 cars, than 3.
You can get even more complicated when it comes to freight. If you ship 1 truck, the tax is 50, if you ship two trucks, the tax is 125. If you ship 3 trucks, the tax is 250. So by shipping 1 truck you are paying more in freight tax.
Freight taxes are pretty straight forward and can be calculated with a simple spreadsheet. If you ship 1 truck, you are going to pay (for example) $10 in freight tax. If you ship two trucks, the tax is $11. If you ship three trucks, the tax is $12. Of course, the tax for a ship is fixed per weight, but freight taxes are not.
Most freight taxes are per weight, and freight taxes are pretty straight forward. In other words, there is no way to get around the fact that shipping 1 truck is still tax-free by shipping two trucks. But you can argue that shipping 3 trucks is still tax-free even though you’d have to ship three truckloads of cargo in one go.
In general, freight taxes are fixed, but it is not uncommon for freight taxes to be variable. For example, if you ship 100 cars, you are taxed on the total weight not on the actual number of cars that you ship. Freight taxes are also typically fixed per piece of freight, but they change as the freight moves through the system. For example, if you ship 1,000 cars, you will be charged per car as opposed to per piece of freight.
What if you ship 10,000 cars in one go then you’re charged on the total weight of the cars that you ship. It’s possible that if you’re shipping 10,000 cars, you’ll be charged the same amount on the total weight of the cars that you ship, but in reality, freight taxes are fixed per piece of freight, so you’re just paying on top of what you ship.