In all the countries I’ve visited except one, sales tax is always included in the price of goods displayed in retail stores. The US is the only country I’ve been where there’s a disparity between the price shown on the goods, and the price you pay at the checkout.
I’ve heard that this is because sales tax differs from state to state, but the argument doesn’t make sense to me, since individual stores in each state would be able to calculate it, and display it thus.
Whence came this habit?
It’s because sales taxes can vary from county to county. For example, in Georgia the state-wide sales tax is (I think) 4%. Fulton and Dekalb counties also charge 1% taxes for MARTA (Atlanta’s public transport system) and Grady Hospital, making their sales tax 6%. The county I used to live in didn’t have these, so it was cheaper to shop there, although they did have a 1% sales tax to pay for schools.
NOTE: these figures are probably wildly off base, but you at leats get the idea.
It’s not just the US which omits tax. I can’t tell you the number of times that the VAT is “conveniently” omitted when I make reservations in the UK.
But to answer your question, part of it is because the tax can vary every year, depending on local elections, since every State, County, Township, and City can vote to impose changes in their portion of the sales tax. Therefore, an item which may have a shelf life of more than a year could have a change in its price.
So why wouldn’t a store still calculate the total goods price based on the county? Is it due to that fact that it might disadvantage one store over another just down the road in a county with lower tax?
Because a national store might have to calculate 50 different prices each item. It is easier to calculate one price and then have each store add sales tax at the end.
Also, as ** Anthracite ** said, sales tax rates change. So a store would have to recalculate the price of every item at the date of the change. Again, it easier to calculate taxes at the register.
Sales tax can also vary from town to town within the same county. So the number of possible tax rates is quite a large number.
It sounds like the European countries don’t have any locally applied taxes, just the VAT?
Also, many items like snack foods, books, and magazines come with preprinted pricing on them from the manufacturer. If tax was included in the price of every other item, this system would no longer be viable.
Because they just don’t?
I also forgot to mention that certain items in certain states (such as ‘raw’ food and clothing) are not taxed, but other items (such as ‘prepared food’) are not. Because of all this, store owners have traditionally left sales tax out of the price. I’m sorry if you don’t “get it”. It’s not very hard to add a 10% guesstimate to your total when shopping.
My guess is that in most other countries other than the US displaying end consumer prices without tax is illegal (as a deceptive business practice). In Germany at least it is; businesses which send out price lists/catalogs with prices not including VAT take pains to make sure they only send them to businesses not consumers, often asking for some kind of proof that you are a business.
Also in most countries other than the US the rate of sales tax/VAT is the same nationwide, and is changed infrequently, so the reasons cited in the previous posts do not apply.
Building on what In Conceivable and GaryM said, I ran some figures and found out that in my old home state, there are 84,111 possible tax configurations (159 counties x 529 active municiplaties). I’m sure that’s not totally accurate (because Atlanta can’t charge you tax in Savannah) but you get the idea. Assuming this is halfway correct, that can be guesstimated to 4,205,550 different combinations nationwide - a sure headache for any nation-wide retailer.
BTW, yes the differing tax rates can be a factor in purchasing. When I was younger, GA calculated the tax rate for motor vehicles based on the location of the sale. So it was much, much cheaper to drive out to the boonies (with 3% tax) to buy a car than it was to buy it in the city (with 6-8% tax). Unfortunately, by the time I was old enough to buy a car, the state legislature had closed the loophole, making the tax payable based on the county of residence. 
Anyway, if you’re every driving through GA and see a HUGE car dealership seemingly in the middle of nowhere, now you know why.
Cconsider a supermarket or any other retail chain advertising in a large metropolitan area that includes several counties and many dozens of municipalities - all of which have various levels of sales tax. As other posters have pointed out, such advertising would be impossible.
To further complicate things, I live just outside the Boulder city limits. If I purchase big ticket items in Boulder, but have them delivered (rather than carrying them home myself), I don’t pay the Boulder city sales tax because they’re being sold to a location outside of the municipal tax jurisdiction.
The differences are a minor issue, but the real reason is simply because it makes the price seem lower. Especially since merchants like prices ending in 99. To get a price of $14.99 after tax, you have to do some heavy-duty calculating (and it may be impossible for some amounts, depending on the break point*). It’s easier to just set a price and figure the tax afterward.
*The tax table may mandate, say, a 30-cent tax for $14.68, but a 31-cent tax for $14.69, making $14.99 impossible.
RealityChuck every tax-included country I’ve been to manages the .99 thing - but the rates are usually across the board, rather than in bands.
While you may never have been here, this type of ‘tax added later’ pricing is also the standard practice in Canada. We don’t, as far as I know, have any sales tax differences on a level lower than provincial, but even that gives 13 different tax jurisdictions (I assume the 3 territories also have their own tax structures) for national retailers to have to price for.
I’m just speculating here, but I wonder if the native tax exemptions have some effect on this as well? Under some specific circumstances, that I’m not really familiar with, natives with status cards are not obligated to pay taxes. If taxes were hidden in the price of goods, it might be more difficult for that particular requirement to be met.
This is a good point. There are a number of ‘tax exempt’ groups/organizations in the States as well. And many stores are set up to cater specifically to them. I imagine for them a least, a single posted price is easier than seperate pricing for the exempt and non-exempt customers.
Maybe it’s psychological. If people see the prices before taxes, it looks cheap to buy, even though it’s the same.
If store A displays items for sale without taxes included, store B for sure will not show items that include taxes.
Ex:
Store A: Gallon of milk $1.75 – Without taxes calculated in final price.
Store B: Gallon of milk $2.00 – With taxes included in final price.
Even though store A will ending up being $2.00 anyway, it looks cheaper. Sound logical?
Also, taxes are included in the final price of cigarettes, fuel and newspapers.
As mentioned, the tax on a given item will vary with locality, and sometimes vary with the purchaser.
People know that tax applies, and generally know about how much it will be. No one is being deceived.
Although the retail seller is obiged to collect sales tax (more accurately, obliged to pay it and authorized to collect it), the tax is not part of the price of the item (this is probably different from how a value added tax is construed). It is part of the cost of the transaction as a whole to the purchaser, but the retailer is advertising and posting the price of the goods, not of the transaction. It’s the government(s) that impose the tax, and the government(s) notify the public how much the tax is.
Also in many jurisdictions, non-profit organizations are exempt from sales taxes when buying supplies for doing their charitable work. They present tax-exempt credentials to the cashier so they don’t add the sales tax when they ring up the transaction.
Americans want to know the real price they pay for goods (and services) and how much the government gets with every sale.
When I lived in Australia, and prior to the GST, it was often impossible to know how much tax one paid. The difficulty wasn’t accidental either. I rember finding out shaving cream for men had a ten percent tax hidden in the price while shaving cream for women, essentially the exact same product carried a 33 percent tax rate!
Why?
Shaving cream for men had a lower tax rate because it was considered a necessity under the tax laws. Shaving cream for women was considered a luxury item, and thus a higher tax rate. Take a guess of the gender of the politicians who passed that tax law?
When I used to repair furniture as a hobby, I sometimes needed a continuous hinge. Ordered as such, it was a building supply item and it was tx free. However, if ordered under a common public name, a piano hinge, it carried a heft luxuray tax of around 40 percent.
Why?
Oz cultural cringe.
I want my taxes separate from the actual price of an item. I want to know how much the government gets out of me.