mhendo, I’d agree with your argument if sales taxes functioned as most other taxes (income, luxury, gift, property, etc.) do: the action causing the tax occurs, then you pay the government whatever amount you owe. My employer can say that they pay me X thousand dollars a year, even though I only receive about 85% of that in my paycheck, because I have the option to take the full amount up front and pay the government later. A TV show can say they offer a million dollar prize, even though you’ll only end up with about $600k, for the same reason.
With these taxes, there are two distinct and separate events: the action itself and the payment of the tax. With sales tax, though, this is not the case; there’s only one transaction, and no money is transferred directly from the buyer to the government.
If I get a room at Holiday Inn that costs $100 with tax included, I give the hotel cashier that full amount, and it remains in the hotel’s coffers until they give the IRS its cut. The tax laws may be well be written (I honestly don’t know) such that sales tax is a direct tax – that is, the buyer is assumed to be conducting two transactions – but that clearly isn’t the reality of it. The hotel charged me a hundred dollars, and whether or not the government forced them to charge a certain percentage of it matters not a whit to me.
Now, if I could pay the hotel their listed price, and receive an annual bill for the amount of the taxes (kinda like how tax on online purchases currently works, except the IRS doesn’t generally track those), then I’d be perfectly fine with them advertising their price without tax included. But, if I can’t stay at the Holiday Inn unless I fork over one hundred big ones to the cashier in a single transaction, then that’s the price that needs to be on the billboard.
Sorry for the double-post, but I missed the window…regarding my above examples of other types of taxes, I realize that legally speaking, the reasons I gave aren’t why my employer/the TV show can advertise the amounts they do. What I should have said was that those reasons are why I don’t have a problem with them doing it. Just wanted to head off any hijack potential from the mistake.
Thank you! This is exactly what I’m trying to say.
My concern, as a purchaser, is this: How much money is coming out of my wallet to obtain the advertised good/service?
I don’t care that you, as a business, are only charging me $85 for a room and the Government wants another $15 on top of that. I still have to part with $100 of my money, to the nice person at check-in, to stay in that hotel room for the night. As far as I’m concerned, it’s costing me $100 to stay there and it’s misleading to advertise the $85 amount as that’s not what I’m paying for the room- I’m paying $100, even if the hotel only gets $85 of that.
So what if $15 of the price is a Government tax? There’s fuck all you can do about it- you can’t not pay it- so there’s no point displaying it as a “separate” charge, or not mentioning it at all. It’s fairer to the consumer, IMHO, to just display the total price including all taxes, fees, levies, surcharges, and so on, and let the consumer decide if the overall price is fair.
Of course, the only way that’s going to happen in the US is via Legislation, so it’s purely hypothetical, but I really do believe it’s misleading to advertise tax-exclusive prices unless the purchaser has the option to not pay the tax at the time of purchase.