The income tax forms in Oklahoma started doing this recently too. They are quick to point out that the use tax is not a “new” tax and has technically been on the books for a long time, and they claim that every state has a similar law on the books even if they don’t call it a “use tax” or make you declare it on their tax forms. They give us the option of either itemizing every purchase we made on the internet (or I guess through mail order or whatever) and calculating exactly what our use tax should be, or using their own estimate (which is a percentage of our adjusted gross income) and using that to estimate our use tax liability. Presumably you could claim that you didn’t buy anything at all subject to use tax and not pay them anything… but I assume that I might be more likely to have my return audited so I go ahead and pay them the standard rate which for me worked out to like $39 this year. Thinking back about the stuff I’ve bought on the internet for birthdays and Christmas and whatnot, I may well have come out ahead that way anyway.
Before there was a “use tax” various States (inlcuding CA) tried to tax out of State transactions. SCOTUS tossed that one out. Now the same various States have taken their old “inter-state sales tax” , slapped a thin coat of paint over the name, and brought them forward as “Use taxes”. :dubious: Have these “Use taxes” been validated by SCOTUS yet?
I don’t know if they have been validated, but they haven’t been invalidated. Which means I pay them. Here in Ohio, we add up our purchases and pay the tax on it. No standard deduction is available.
- You are assuming that the tax is actually applicable (and enforceable) on an individual item;
and - you must have very low labor costs.
A state with x% sales tax does not necessarily attempt to collect the tax on every fraction of a dollar. For example, a 4% sales tax would earn 1 cent on a twenty-five cent purchase, but what does one charge for a ten cent purchase? We do not have portions of cents. So, a ten cent purchase gets no tax. However, three ten cent items have tripped the twenty-five cent line to incur the penny tax. What is the appropriate price to put on the item so that buying multiples of an un(der) taxed item will correctly provide sufficient revenue to the retailer to cover the gross tax levied by the taxing agency? (I recall Belgium handling this by pricing to the nearest centime to cover the tax, but since they had no coin smaller than the 25 centime piece, at the end of the sale the last few centimes were simply rounded or dropped. It is a workable system, but not one that has been attempted by any U.S. states. it was easier (psychologiaclly) in Belgium where they had a word for 1/100th of a Franc even though there was no way to actually pay 1 centime for any purchase. If the periodic proposals to stop minting pennies ever get off the ground, it might be easier to try that here, as well.)
Now compound that situation by having three stores within a seven mile radius, all served by the same warehouse, with successive state and county taxes of 5.5%, 6.5%, and 7.5%. The “break” point for each store is different, so you must use local labor to individually price every item. However, the major chains have opted to reduce labor costs by having the prices placed on the item before the item reaches the store. (In fact, for many items, the prices are actually printed on the manufacturer’s label (which is often made/printed in Taiwan, China, Thailand, Brazil, or wherever). Moving the local taxing authority pricing back into the individual stores for hand processing would be very labor intensive compared to the current methods that have already removed those costs.
(With bar coding, the stores have even moved closer to your ideal, since individual items are not even priced, the register scanner taking the price off the central database when the item is scanned, so setting prices at the local level would be a matter of only changing the shelf price, however, you are still faced with the “break” point where multiple un(der) taxed items incur higher taxes for multiple purchases.)
It almost seems that you are suggesting that Australian vendors are rather oblivious to costs (or your labor costs are significantly lower). Back in the bad old days when we had to individually price items, it was a real pain in the butt (and a significant source of manpower wastage) to put sale prices on all our stock. We reduced the overall effort by leaving the original prices on the items with their green or yellow tags and then placing red and white “sale” price tags next to the original tags. When the sale was over, any unsold reduced price items simply had the sale tags removed, leaving the original tags. Nowadays, the stockers are expected to simply stock, swiftly, and not waste time (labor costs) putting tags on anything.
It is not quite that fluid. Depending on state laws, the state, or state and county, or state and county and municipality above some arbitrary population limit has the authority to set tax rates. The issue is not that the rates change frequently, but that in a fairly mobile society, one may find oneself shopping in multiple tax districts.
For example, in my exurban neighborhood, I find myself shopping in at least three separate taxing authorities for standard purchases. It is not at all uncommon for me to make out my list, start in Geauga County, swing into the city of Aurora (Portage County), and head into the city of Solon (Cuyahoga County) to hit different stores in a four mile radius (after making the initial drive to get to the stores in Bainbridge Township/Geauga County). It is quite possible that if the Giant Eagle supermarket or the K-Mart in Bainbridge is out of a product (at 6.5% tax), I will (grudingly) pick up the same item from the Giant Eagle or K-Mart in Solon (7.5% tax) since I have to drive past them on the way to another store, anyway. My situation is probably not really common, based on my location, but the distribution manager for those stores that serve all of them is well aware of those discrepancies.
Oh, I suspect that most North Americans (or Yanks, I don’t recall how Canada handles this stuff), would agree with you, in principle, but the practices have been in place for so long that we generally just live with it. (Certainly, we figure that having to calculate the additional tax in our head is preferable to having tax applied on lower ticket items unnecessarily just so we can see exactly what we are being gougd on the label–if there is a label.)
Your method also runs into trouble when the buyer is not subject to tax. Schools, charities, people making puchases to be shipped out of state, and some other outfits are exempt from paying sales tax, so you would force buyers for those groups to have their sales rung up, then have the sales recalculated without the tax. In some ways it is easier to simply let everyone figure the taxes in their head and have them confirmed by the cash register.
The point that sales tax varies by area is spot-on. For example, if my mom buys something for me in Butte County she pays 7.25% in sales tax - that’s Hicksville and they don’t have the same quality of Public Services as the Bay Area. If I buy the same exact item here at home, I pay 8.75% sales tax and that includes city taxes and also other county taxes which are used for God knows what. I think that the high sales tax is mostly in large metropolitan counties because we have more Public Services available to us than the small hicktown counties that only have volunteer firefighters and police, no street sweeping, no Animal Control, etc.
Isn’t that sort of thing what your Rates (Council Land Tax, basically) are for?
I personally like the transparency in having the tax separate from the price. It lets you know what the real price is, independent of whatever tax rate you’re being charged. Some gas stations in California broke down the included taxes and had them posted at the pump. It was a constant reminder that the pump price is vastly different from the actual value of the gas.
From the vendor or manufacturer’s point of view it’s certainly simpler and easier, as many people in this thread pointed out, to have one base price and let the local retailer deal with the varying tax rates. It also benefits the retailer in that the price they offer in ads is not subject to change with location. Besides requiring multiple advertisements, it might affect which locations will support the actual stores. If the price includes tax, one store that’s close to a border might get more business than another store owned by the same retailer and charging the same base price simply because of a small difference in price due to a different local tax rate. That could make a difference between City A and City B having a retail outlet for that store.
They recently changed how tax is labeled here. Even though the tax rate is a simple 5% over the whole country, as of last year labels had to include both the original price and the price with tax included. I can’t help but think that means that they’re going to raise the tax rate and the dual price labels will obscure the price increase since the tax rate doesn’t have to be labeled, just the price with tax included. If you want to see the real tax rate, you’d have to do the math to see what the percentage of change from the base price to the price-with-tax is.
You wouldn’t believe the taxes we pay here. When our latest sales tax hike went into effect, IIRC, it was for upgrading the Oakland/SF Bay Bridge. Our sales taxes pay for many different things. Whenever they think that Alameda County is getting something extra or they have an important county project, our taxes rise accordingly. This is in addition to property taxes (that include vermin abatement, creek restorations, road improvements and the like). Even my freaking water bill has a tax that goes to the fire/police, called “emergency services tax”. Can you believe it? We pay alot to have the priviledge of living in the USA. We even have to pay tax on any State tax refund we might get at tax filing time. F’ers.
That’s how I recently explained taxes to my son. They’re the price we pay for living in the US and everybody has to pay them simply for the “honor”. Sheesh! And yet, we’re still how many trillions in debt???