And that matters if you have to be careful about spending. Also, "everyone knows about them", really? If it's so easy to "know" the local tax rate for various things, why isn't it easy to label them?
See the rest of the world, where even young kids can go shopping. If you give them 5 <amount of currency>, and the item they want is less than 5, or they want five of something that is 1, they can buy it.
We know them generally enough to get by. That doesn’t mean calculating them precisely is a peach. America has a proud tradition of strong local governance. Add to that its federal structure, and the number of entities that can subject a particular transaction to taxes is large.
Most damningly, I believe there have been stores that tried to differentiate themselves on the basis of all-in pricing. It fails. Because unless you’re paying cash or precisely monitoring spending, it doesn’t matter. (There is also a transparency argument in knowing how much is going to the business versus state.)
For example, the one common tax in the US that is hidden in the price is tax on gasoline. I think it would be better to specifically call this out, especially since gas taxes can vary so much by jurisdiction. I mean, pretty much all adults where I live know our sales tax rate is 8.25%, but I have actually no clue what my per-gallon tax on gas is.
Displaying THE PRICE on products is so amazingly basic that it's always mind blowing seeing Americans think this is a complicated question. It's not. If I have to pay 5 dollars at checkout THEN THE PRICE IS FIVE DOLLARS.
Not the strongest argument, but there it is.
A college friend worked at a pizza place that straddled a county line. One county had its own sales tax; the other did not. The register was in the back of the store to take advantage of this (the location of the register was considered the point of sale for tax purposes). Question: would it have been legal for them to advertise a price in the higher-tax-county part of the store that only applied if you bought the pizza from the outher county?
Local sales tax and national VAT are similar, but they don't work that much alike in practice.
While I wouldn’t mind if most ads just disappeared I don’t see how effectively banning businesses from advertising their prices would benefit the consumers.
If we zoom out of the “uniquely American issue” mindset for a second and look at how this is solved elsewhere, then it becomes clear that it doesn’t have to be an issue.
In this day and age plenty of multinational corporations advertise a euro price that applies for all the countries in Europe that carry the euro. This is a situation where companies have to account for varying VAT rates.
The solution? Companies take this into account w/r/t their margins when advertising a euro price that applies to all euro countries.
In the US however it’s even less of an issue. I’ve noticed as a European that when you watch TV here in the US many ads are hyper localized, mentioning the closest local store. If they can do that then they can list the price the item has at that store.
The real reason the full price including taxes isn’t used is because companies can make it look cheaper without hurting their margins, thus draw in more customers.
Or they just recalculate the price based on you shipping info.
It would be rather absurd to expect companies to just “account” for an up to 7% difference in tax rates between different countries.
> TV here in the US many ads are hyper localized
While there are many local channels in some states the tax rate might even differ between counties or towns.
> The real reason the full price including taxes isn’t used is because companies can make it look cheaper without hurting their margins, thus draw in more customers.
Conjecture. Also you’re assuming that most people are incapable of doing basic math.
> somewhat
You can, but one side is going to be spouting garbage. Listing the actual total cost to the purchaser is so obviously better.
Seems to me giving people a shock at the checkout is a particularly evil way of making taxes explicit. It isn't like the taxes aren't broken down on EU receipts for those who care; in fact it's quite explicit.
In the EU the receipt must show what amount of the price was VAT.
This is so that companies can deduct the VAT in taxation (basically only the final consumer of the product/service pays VAT. Everyone else in the chain can deduct it in taxation)
Just by default you don’t have to think about it, and it shows up in all the places if should - government included.
What's the default tip, that is to say, what's the max you are allowed to detract? Is it the same everywhere or does the default very by restaurant? I could see the appeal to laziness resulting in more consistent tipping, but also fewer tips for exceptional/attractive/flirty waitstaff.
Ultimately, I'd much rather do away with tipping entirely. I grew up never questioning it until I spent some time in places where tipping just wasn't a thing, and I've resented it ever since.
Wages of workers is included, just like the other overheads are. If you want to give a gift to someone -- a tip -- how could that possibly be even known in advance.
Disagreed as well. With Taxes, literally 100% of all items have the same convention that is not "bait and switch".
This particular new law is not attempting to address that. Maybe it should. But maybe doing so would be biting off too much, and its sponsors believe it would never pass if they tried that.
The purpose of this law is much less ambitious, but that's fine. Incremental improvements are better than no improvements. I am pleased that now hotels can't spring daily "resort fees" on guests after they show up for their reservation. That sort of thing.
If you live in the United States, you know that a) listed prices rarely include tax, and b) for an annoyingly large number of things, you will be expected to add a tip. If you live here and don't know that, you are not particularly well-equipped to operate in the real world, and you should learn. If you don't live here but are visiting, it's unfortunate that you might not know about these quirks of American capitalism, but the law is not really aimed at you. Sorry, but our quality-of-life laws are tailored to people who live here first and foremost.
> If it's so easy to "know" the local tax rate for various things, why isn't it easy to label them?
It's not about being easy. It's about stupid psychological effects. If I list my price tax-inclusive, and my competitor lists theirs without the tax (but ultimately will charge the same price as I will), my competitor will get more business than I will. It's dumb, but that's human psychology for you.
> See the rest of the world, where even young kids can go shopping.
Young kids can shop here just as well. They just have an extra step to learn. They deal with it just fine; kids are smart and adaptable.
Because you pay the tax from the total of your purchase and not from each item separately. E.g. in Santa Monica, CA sales tax is 10.25%, a price on a $4.95 item with tax included would be $5.46 but on 10x of these items it's just $54.58.
Wouldn't it be far better to establish a rock solid precedent that the price there is the price you pay? Every exception that remains is an opportunity for weasels to justify why they are also the very important exception to the rule.
You sure that's worth a rounding error?
I don't think so, there are more apparent reasons listed in this thread already. I am just pointing that rolling a sales tax into price is not as simple as some imagine. I imagine VAT is accounted differently so it could be rolled into the price without this kind of error but I've never dealt with VAT so I can only speculate.
>Wouldn't it be far better to establish a rock solid precedent that the price there is the price you pay?
For whom? I don't see how it would be better for me but as somebody else noticed, the retailers are free to roll the tax into the price, the fact that they don't do this might be a pretty solid indication that it's not better?
Nope. VAT has complicated rounding rules too. Turns out it actually is still easy to roll it into the price.
> as somebody else noticed, the retailers are free to roll the tax into the price, the fact that they don't do this might be a pretty solid indication that it's not better?
It's a lemon market. It's better for the customer if the actual price is displayed up front, but the customer has no way of knowing which shops are advertising real prices and which aren't.
You mean it's a market with information asymmetry? How so? Customers know both that the sales taxes exist and their magnitude. If you think it's a great idea you can put big sign saying on your shop/in your ad "inc. tax" instead of "plus tax", which is on most advertisements already. Surely customers could read it.
Customers have a sense that they exist and a vague idea of their magnitude, perhaps. They don't calculate them, at best they compare the advertised number - remember most customers are average intelligence or below.
In the US even young kids can go shopping too. If you give them $5 + <tax on $5>. They can then buy any item whose price tag says $5 or less or 5 of any $1 item.
If you don't want to have to know the sales tax for your location, I believe the highest sales tax in the US is under 11% so just give the kid $5.55.
Pretty much everywhere else I've travelled in the world, the price on the shelf is the price you pay, even when tax changes based on what something is classified as (to whit that fun legal case of "is a jaffa cake a cake or a biscuit").
For some absolutely bizarre self-hating reason, the US has decided that, no, your experience should be "Oh wait, now I've got to go and add some seemingly random sales tax that I can't likely predict in advance, and won't know until I've rung everything up".
It's just one of many little ways that the US operates that's profoundly at odds with a positive experience for citizens. You _could_ have the prices right there in the stores. You _could_ structure your tax system such that the prices can actually be done that way and you don't get the rounding fun that you see mentioned elsewhere in this thread. However, because you do this "hide the actual price" there's zero incentive to actually implement tax approaches that are nicer as a citizen/consumer.
If you'll forgive a slight diversion, it's a similar deal with tax incentives. In a lot of countries around the world, they structure it such that the tax incentives happen at time of purchase, so e.g. a $2,500 rebate would result in you, as the buyer, buying at price $2,500 less than it would have been otherwise. You never see that $2,500 at all, you just see a much cheaper sticker price. It's end user focused, like you'd think a government for the citizens, by the citizens, would be.
The US approaches it such that you have to actually have the money spare up front, to eventually get it back (or mess about with your monthly withholding to try to claw it back that way, quicker). This penalises poorer citizens, who otherwise might have been able to afford to buy whatever thing it is that they could potentially afford. You essentially miss out on the tax incentives the government comes up with, unless you happen to be rich enough to afford a well versed tax accountant, or have enough luxury of time to sit there and work through all the possible rebates you might be eligible for. Neither of which poor or disadvantaged people tend to have.
With this being the way that tax incentives have long been done, there's no real incentive to try to do it any other way, even though it would be better for literally every citizen, rich and poor alike, with the possible exception of tax accountants. You'd all get specific rebates you were entitled for.
You're overlooking the context. Someone said it was easy to let young children go shopping in places where taxes are included in the sticker price because you can give the kid $5 and the kid knows they can buy any item with a sticker price that does not exceed that or a combination of cheaper items whose sticker prices do not sum to more than 5$.
The implication was that this is harder for young children in the US, presumably because young children won't be able to do the complicated mathematical finagling that the rest of the world apparently thinks Americans do every time they go to the store.
My point is that in the US you just give the child $5 plus enough to cover tax, and then the child can use exactly the same approach those kids elsewhere use: if sum of sticker prices <= $5 they have enough money.
Cook county tax 2.75% Illinois state tax 6.25% Chicago city tax 1.25%
This thing I bought had a sticker price of $11.90
How much did I pay?
and depends on what you're buying. See sugar taxes, takeout taxes, restaurant taxes, etc.
Also, how do you know if tip is applied before or after taxes?
adults in our country assume a $1 and a $5 price tag is tax inclusive. the receipts show it.
how you gonna tell the kid it's priced at $1 but you gotta pay more than $1 because it isn't tax inclusive? lol
The only advantage to not including taxes is that people spend more money. This is marginally better for stores and worse for everyone else.
Theres no genuine benefit to society for not including taxes in the posted price.
While at this point it makes more sense to come up with a new law/methodology, I understand the thought process. If an item is $5 final price you don't know how much the tax actually was. The taxes can be raised easily and only those paying close attention to local or state politics would know. It's a backstop against government greed.
Again, I think we could reform this tax code and tip culture. However, I believe you legally have to include the tax. Maybe you simply should only be able to advertise the final price, but on the receipt it shows the tax rate.
Having the money 'in your hand' and then having to write a check for thousands of dollars feels much different. The guillotines would appear quickly.
And it still widely works - queue all the folks happy about ‘getting their money from the gov’t’ in the form of their tax refund at the end of the year.
I think the reason taxes aren’t included are because lower prices make people buy more. Similar to $4.99 sells more than $5.
If the sales tax is 9.25%, round up to 10%, so $1 on every hundred.
I walk into a store and buy something for $7.32. Ok, I know in my head the tax is about 0,70, so cool, it’s be “about” $74.
That’s all I need to know. I don’t carry rolls of Pennie’s around so I’m not worried about the cents. He’ll, when was the last time you paid in cash?
It’s the same with Fahrenheit or miles. It’s a simple calculation, not a massive obstacle that holds Americans back from daily living or technological advances.
Case in point, I asked for 1/3 lb of deli meat yesterday at the grocery store, and received 0.41 lbs. Worse, the worker was concerned that they hadn’t given me enough.
Your example is actually a great illustration of why expecting people to calculate taxes in their head doesn't work. If you are trying to buy a product priced at $7.32, you can't easily tell whether $8 is enough. No one should have to multiply 9.25 by 7.32 in their head to know whether they can buy something.
Enough with this insanity. If the price is $8, then $8 should be enough!
Basically it should be illegal to not include any required monthly fee in an advertised price.
'Every one knows' is a very US centric view, which even I doubt is true given the degree of illiteracy and math deficiency in the overall population.
If we were talking about, say, a French law, I would expect the default assumption to be French standards and customs.
You do realise you are travelling to a foreign country, right? This rings to me like Americans who travel to Spain and complain about the siesta, or Argentina and how late they dine.
Lots of local government means taxes change over smaller distances in America than most of the world. Also, most retailers here use paper labels—a result of historically-low inflation expectations. It’s easier to implement that complexity at check out than on the shelves. (I’d also guess that America’s credit card use means more check-out stations are digital than in much of the world.)
Add to that a cultural distrust of taxation and government, a decreasing tendency to use cash and a higher income per capita and you have a genuine difference in preferences.
> cultural distrust of taxation and government
> a decreasing tendency to use cash
> higher income per capita
Really don't see how any of the points above are an obstacle to putting the ~actual~ price of a product on paper.
> Also, most retailers here use paper labels
Great! Makes it even easier to printout the actual price. 1) Retrieve base price from database 2) Add local tax 3) Add whatever other "hidden" cost is needed 4) Printout label.
The pieces of paper are in multiple places. The bill is calculated in one place. Doing things in multiple places is more costly and error prone than doing it in one. (Also, the paper being physical means a physical person must update it. The POS can be remotely managed.)
Here is New York State's guide on clothing and footwear taxes [1]. (It's particularly well documented.) If any one of those counties makes a change, you're now proposing someone run through the entire store to update the affected labels or else risk lying about the price. That's manageable for a multinational. It's bonkers for a small shop owner. Instead, their POS is remotely updated (worst case, they get a bulletin to punch in a code) and when the barcode is scanned, the system figures out whether it's $110 or less and if it's really a costume or not.
If consumers valued it, tax-inclusive pricing might be worth the effort. But in America, we don't. The number isn't big enough, and I'm swiping or tapping either way. (Cash-only stores do tend to be tax inclusive, at least in New York, but that's because they're usually not paying the whole tax.) As I said, I can't remember finding it helpful when I travel to tax-inclusive priced countries. Surprising as it may seem, this really is simply a cultural preference. No right answer.
[1] https://www.tax.ny.gov/pdf/publications/sales/pub718c.pdf
This isn't free. That's someone's time and energy spent on something I, as the consumer, don't care about. Why? I'd much rather have that person available to help, ready at the counter or frankly at home or in a park enjoying their life.
What has meaning for you doesn't for me. I don't value having a precise price at selection versus purchase. At all. Like most Americans. That doesn't mean I don't see the value in your argument, just that I reject it as something that matters to me.
> What seems 'bonkers' to you has been standard practice in most of the world for decades
Not remotely comparable in terms of rulebook complexity. Also, income: if you want to find tax-inclusive round pricing in America, go to impoverished neighborhoods. There, every nickel counts and folks pay cash--it makes sense to spend the effort to precisely message pricing ex ante.
Also, in most of the world posted prices either aren't a thing or are completely negotiable. Haggling at the point of sale isn't a thing in day-to-day America.
Not to mention the vast amount of online shopping Americans do, where it would be trivial to include a local sales tax. (Every online store I'm aware of already immediately asks for your location and tells you to search for the nearest location anyways.)
I also reject the idea that most Americans wouldn't value this. I would bet money most Americans would prefer it -- they just aren't aware that other countries are capable of doing things better.
It's not free but it is negligible relative to routine relabelling. How many times do you think the tax rate changes per year? Maybe twice, at most, if the government budget is facing some major upheaval. More likely is every few years. Compared to the number of times the store will put things on sale or change the prices, that is negligible.
That's not true. I would guess the vast majority of consumers would at least slightly prefer that the tax be included in the display price. The problem is those consumers aren't an organized interest group, whereas retailers are. It's not a "cultural preference"--it's just the inability of the political system to address large but diffuse problems.
Furthermore, literally everywhere I’ve lived in America, I had 3+ local sales tax rates within my typical shopping range and it’s nice to know which areas have lower rates so I can preferentially make larger shopping trips there.
In the current system, to get that information you have to compare the label cost to the cost you paid. How is that more simple and convenient than looking up sales taxes in your area, or mandating they be displayed on labels in addition to price?
You can, if you change your prices in every state so that with added taxes, it adds up to $5 for the consumer. We don't have to accommodate our system of sales taxes to make it more convenient for national corporations to make $5 foot-long campaigns.
sorry, no, it doesn't. Taxes, by law, must be calculated at the point of sale. A penny on each of 5 items could sum to enough to bump the tax on the overal total by a penny. You're not allowed to "round" that extra tax away by computing the tax individually on the items.
Apropos of nothing, but I loved that about the place
Thing is, leaving aside foreigners, there seems to be such an intrinsic contradiction between the 'everyone knows' and the 'it is so complex we can't even put it on the store shelf price label'.
Over here (Europe) for better or worse near 100% store checkouts are digital, regardless of wether you pay with credit or debit card. We get the correct price we will pay displayed on store shelves. We get a breakout of tax on the PoS ticket. In most places we also get a breakout of the price and the promo on the ticket (as in e.g. buy 2 get one free promos).
Yes. I am biased by experience, but I fail to see how not knowing how much you will pay for someting when and where you make the decision to buy it, that is when you take it of the shelf and put it in your cart, can be an advantage you would argue for.
I have lived in the US my whole life and I can't remember that last time I left a tip for anything besides a place that you sit down to eat and someone brings you food.
My first job was delivering pizza and that is something with a long social norm of tipping. A tip was a nice bonus but if someone didn't tip it didn't matter because someone else people would tip an irrationally large amount. I didn't think bad of those that didn't tip, I just assumed they were that broke.
It is not that "every one knows" it is that no one cares about this in the real world the way they do when grandstanding on social media.
Displayed prices should be the price you have to pay - full stop. No math required or knowledge of local municipal/state/federal tax structures, no required knowledge of local cultural expectations around tipping. Just pay the price. Just because you're accustomed to tax/tip additions doesn't mean they are in any way a good thing that should be preserved.
Because we get that now on most (if not all) grocery stores and retailers. I can see what items in my grocery receipt were charged which of the various local taxes and can dispute them. I've had groceries miss-categorized and considered prepared food which carries a local tax in my area, but they were not prepared foods and should not have been taxed.
Having a full price up front isn't the magical cure a lot of people paint it as.
And yes they are on the menu, but they are hidden on at the end in fine print. I don't think that is correct.
Same goes for say renting a jet-ski. They advertise price X. I select the venue based on advertisement X, because it is cheaper than its neighbor. But the venue tacks on a mandatory $30 refilling fee that I cannot get rid of.
Or a hotel and their resort fees. The only reason it is separate is to show a lower price on the comparison sites.
If it's mandatory, it should be in the price, at least then I can compare.
And I believe that putting a 3% credit card surcharge should also be banned. If they put in a 3% cash discount, I'm fine with that. At least it allows me to compare prices.
The taxes should be a separate line item on all purchases, so people can see what the taxes are.
I do also like how Costco breaks down the taxes on liquor, as far as I know those taxes existed before privatization of liquor sales in Washington, its just they were hidden in the "tax in" prices Washington State Liquor stores would post.
And of course none of this is incompatible with still printing one big-print all-inclusive price.
You can have a debate about how to display those items on a price list, but everyone knows about them and they are expected. The whole point of this bill is to prevent bait-and-switch, where loads of unknown or variable fees are tacked on after the price is initially shown.
The one caveat I'd say about a tip is if it's mandatory. E.g. if a place requires a minimum tip amount for large parties, it's no longer a tip, it's appropriately called a service charge.