US Taxes - Why are they separate?

[vato_loco]

It's something that's always bugged me.

Where I come from, taxes are already on the price they display, so when I traveled to USA last month I started to wonder why you guys didn't do that, and always added taxes at the end, which means that the displayed price is never what you end up paying. I asked a couple of people but nobody knew, so perhaps you could shed some light on this.

WARNING: this is not a criticism or a flamebait. I am genuinely interested in this.

 

[vato_loco]

Damnit, I just realised that, sorry. I'll see if I can delete this...

 

[braincore02]

Well I dunno why the system started like this, but it's a boon to sales/marketing departments, who can offer a product that appears to be at a lower cost than it will actually cost you, suckering in sales of people who don't think about all the hidden fees we get with everything in this country. If you're buying a stick of gum it doesn't lead to a huge difference, but if you're buying a car they can advertise a price that's thousands of dollars less than you'll actually be paying.

 

[Owyn_Merrilin]

Well I dunno why the system started like this, but it's a boon to sales/marketing departments, who can offer a product that appears to be at a lower cost than it will actually cost you, suckering in sales of people who don't think about all the hidden fees we get with everything in this country. If you're buying a stick of gum it doesn't lead to a huge difference, but if you're buying a car they can advertise a price that's thousands of dollars less than you'll actually be paying.

I don't know why the law is set up this way, but that is the upswing of it. Considering how pro-business and anti-consumer our lawmakers are, it wouldn't surprise me if that's the actual reason it was implemented that way.

It's worth mentioning that occasionally you'll find some bargain item that advertises the price including tax, but it's the exception rather than the rule. It's also worth noting that over here, there is no gratuity added to the cost of a meal at a restaurant, so it's up to the person buying to decide how much to tip, or whether to tip at all.

 

[Buzz Killington_v1legacy]

The way I always understood it was that it's a function of the way sales tax works in the US. Instead of a national VAT like the UK has, sales tax can be set all the way down to the city/town level. There are parts of the the US where you can drive for twenty minutes and be paying several fewer percentage points in sales tax.

Updating all the price labels in all the locations for a chain like, say, Best Buy would be prohibitively expensive, so they just put the retail price on everything and add tax at the register.

(I personally prefer the way the UK does it--it's a lot easier to shop when you're short on money and know exactly how much everything's going to cost.)

 

[vato_loco]

The way I always understood it was that it's a function of the way sales tax works in the US. Instead of a national VAT like the UK has, sales tax can be set all the way down to the city/town level. There are parts of the the US where you can drive for twenty minutes and be paying several fewer percentage points in sales tax.

Updating all the price labels in all the locations for a chain like, say, Best Buy would be prohibitively expensive, so they just put the retail price on everything and add tax at the register.

(I personally prefer the way the UK does it--it's a lot easier to shop when you're short on money and know exactly how much everything's going to cost.)

That actually makes a lot of sense. Also, showing the non-tax price is always better for shops because that way you can't really measure what you're spending. Add that to the fact that most US citizens pay with credit card and you have a very interesting hidden cost in everything.

So even if you guys wanted to change that, it would be impossible due to large chains like BestBuy or even Amazon, since prices vary according to state.

 

[bleh002]

In addition to that, the sales taxes don't go to businesses and aren't a part of that companies revenues.

Not having them included in the price, makes it easier for commodity tax agencies to calculate how much they should receive from that business.

Having grown up in Canada (which has GST and PST in some provinces, just GST in others, and soon, more provinces with HST) realizing that the price shown is not the end price I pay was only tricky until I was about 10.

The tricky part was calculating how much it was going to be after tax when the GST+PST or HST doesn't add up to something simple, like 10%.

 

[Good morning blues]

Because it makes the prices look lower. If one store started including tax in their prices, few people would compare that price to the after-tax price of a different store.