I went to Maine this weekend, and yet again had to do math as I tried to figure out the cost of the things I was buying. Why is sales tax calculated separately from the item’s cost? It’s not as though we don’t pay “hidden” taxes already (gas, a tax on hunting products- which includes film if my Wildlife Management professor is to be believed) so why not just add the tax into the price on the label? Is there some sort of benfit to saying something costs “$1 plus 5 cents” rather than simply “$1.05” that I just fail to see?
I think it’s the same reason why things cost $x.99 instead of $x. It makes us believe we’re getting a real deal. They wait till the last minute to remind you “it’s more than you thought.”
Plus, it’d make it a real bitch for companies that print prices right on their products (like 99 cent “grab bags” of chips) because sales tax is different everywhere.
Becasue they don’t have to. Would you go to burgerjoint and get supercombo for $4.99 or McCow and get a giantmeal for $5.37 if they were basically the same?
ASC (American Skiing Company) recently (ok maybe 2 yrs ago) broke out the tax on their ski lift tickets to boost the price w/o boosting the price.
so one year the price was $55/day the next it was something like $59.87 but they still advertized it as $55. AFAIK they are the only area to break out the tax.
In a way it’s a good thing so you know how much of your money is going towards tax. Add to that the amount that is taken in income tax (again lots don’t see it/don’t pay attention due to withholdings) and you have to wonder WTF are they doing with about 50% of everyone’s income?!?!
Sales taxes are not included in marked prices in the U.S. for two reasons:
- Multiple taxing authorities
- Central Distribution
Notice that on a great many products, the price is physically printed on the manufacturers label, rather than being stuck on with a stamp or sticky tag. This reduces the manpower costs associated with individually pricing every object on every shelf in the store.
In the U.S., however, there are states with no sales tax, states with one sales tax, and states with multiple sales taxes (and even some states with the same rates calculate taxes differently).* In addition, different states with sales taxes have different rules regarding items to be taxed. (Pennsylvania has no sales tax on clothing, I believe, while Ohio has a surcharge on the syrup used in pop (or soda).) This means that it would be an insurmountable problem to place the price on each item at the manufacturer, since they would have to be able to identify the exact store (and taxing authority) that was the destination of each object that was packaged. In addition, any item that was re-routed to a different location would have to be manually re-tagged.
Stores have found it simpler to place the taxation rules into the cash registers.
*Examples:
- Ohio has a 4% tax rate, but each county (and some cities) may add additional rates. So the K-Mart near my home charges 5.5% tax, but the K-Mart 5 miles to the West charges 7.5%.
- In the days when Michigan had a 4% tax, the merchants complained that they were losing money because five .05 nuts or bolts could be sold individually at no tax but would wind up costing the store a penny tax since the five sales accumulated .25 in reported income. To offset that perceived problem, Michigan set the tax rate to go to one cent at .13, two cents at .32, three cents at .57, and four cents at .72. Any similar 4% state that charged an additional penny at .25, .50, $.75, and $1.00 would look very different to any system attempting to calculate the tax.
Becasue they don’t have to. Would you go to burgerjoint and get supercombo for $4.99 or McCow and get a giantmeal for $5.37 if they were basically the same?
ASC (American Skiing Company) recently (ok maybe 2 yrs ago) broke out the tax on their ski lift tickets to boost the price w/o boosting the price.
so one year the price was $55/day the next it was something like $59.87 but they still advertized it as $55. AFAIK they are the only area to break out the tax.
In a way it’s a good thing so you know how much of your money is going towards tax. Add to that the amount that is taken in income tax (again lots don’t see it/don’t pay attention due to withholdings) and you have to wonder WTF are they doing with about 50% of everyone’s income?!?!
We’ve been here before:
http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=77067
I see tomndebb has arrived to make the same points here as he did in that thread. Oh well. Side note - CA is kicking around the idea of a “sales tax holiday” like the TX version alluded to in that thread.
LL Bean is a rare case where the prices include shipping. I like that because it shows me the true cost of the item.
(at least they used to, I haven’t seen their catalog in a few years)
And for the perspective of businesses that set their own prices:
I don’t include sales tax in my quotes because it’s not part of the price of what I’m selling. Yes, the customer has to pay it, and yes, I have to collect it (and remit it). But it’s a TAX on the transaction that goes to the state, it’s not the PRICE for the goods I sell. It’s calculated separately because it is separate.
Customers are expected to know that there will be tax, something most of us learned when we were old enough to buy a candy bar ourselves.
I have read both threads and I haven’t seen the answer that applies to us here in Idaho.
For us it is illegal to add the states sales tax into the the cost advertised, just as it is illegal to just “eat” the tax by adding it into the goods sold.
Each and every invoice must have the cost of the item, service and sales tax clearly and seperately marked out.
IMHO sales tax is very unfair for the vendor. I not only have to compete for sales with nearby states that have no sales tax, but my own state requires me to collect, monitor and remit the tax to the state, all for no pay. The cheap buggers don’t even provide stamps to mail in the proceeds. I am not in business to be the state’s tax collector.
Sales taxes are a pain in the A**. In this state, most services are exempt but all goods are taxable. That is unless you or your organization is exempt. I have shelves of requirements along with monthly updates that we are required to be aware of. If we or an employee screw up, we are required to pay the tax out of our pockets. ::can ya tell I’m bitter?::
[ul]
[sup]Sales taxes do not apply to items sold on the internet (except in the state where the seller is located), so buy “Amazon”[/sup][/ul]
Actually I believe that it is the responsibility of the internet purchaser to report the sale to his resident state’s taxing authority and pay the sales tax himself. Of course no one does that but you’re supposed to…
Even if a local vendor were allowed and able to include taxes in their advertised price, there is no incentive to do so. All the other stores around add tax at the register, and all of your customers know that tax is added at the register. You might actually hurt yourself because your advertised price is higher than surrounding merchants.
>> Why isn’t sales tax included in the price advertised?
For several reasons, some of them good. Tha tax is paid by the buyer and, as a buyer, I want to know, and sometimes need to know what I am paying in tax. Also, some buyers are exempt from sales tax. To me it just makes sense.
Actually, what I think you meant to say, was “sales taxes are not collected from items sold on the internet (or any items sold via mail, for that matter) except in those states where the retailer has a business presence”.
The reason for the law being written this way, I do not know (although I suspect the reasoning is that if you have a business presence in a state, it is much easier to be familiar with its tax laws). What it means is that if the retailer has an office, store, or warehouse in your state, they are obligated to collect state sales tax (if it applies to your state).
Actually, the theory holds that if you have a business presence, such as sales agents, in a particular state, you are utilizing resources of the state that are paid for with taxes. Sales agents are protected by police, fire, etc., utilize the highways, and as one South Carolina judge put it, the state provides an economic enviroment. If a business is utilizing these resources to do business, then it is only “fair” that the business collect taxes to help pay for those resources. Look up Complete Auto Transit v. Brady Supreme Court case for a more detailed explanation.
That’s correct. We have sales reps located in several states and for each customer in one of those states we are required to collect sales tax.
Michigan’s tax form has a line for purchases you made online. You are supposed to pay sales taxes on those.