Ok so for reference and if this a stupid question, I’m from a country where the price tag is the final price. Tax included. But I’ve been to the US (recently I learned Canada has it too) the final price (tax) is added at the checkout. I find it kinda annoying because how do you know the exact price before checking out? Is there a way?
32 comments
Taxes can vary from city to city, so the price would have to be slightly different at every store. Is that possible? Sure, but America is run by big business and it’s easier for businesses to advertise things at $49.99 than $61.23.
A few different reasons:
1. Taxes vary by location
2. Taxes vary by date and time
3. Taxes vary by the tax-exempt status of the purchaser
So, companies set their fixed price and how much tax is paid is calculated at the point of sale once these factors are known.
It’s because taxes can vary either from state to state or sometimes even within a state. For example, New Jersey the tax is about 7% but in certain urban areas it’s half that at around 3.5%. Imagine you’re in charge of a brand that’s sold nationwide and now you have to maintain 50+ SKUs for each product that has the price on it. You’re now also limited with where you can move stock around as you either have to retag or sticker over the price of the same product from a different location.
This question is answered in the FAQ [here](https://www.reddit.com/r/AskAnAmerican/wiki/faq/other/#wiki_3._why_is_sales_tax_not_included_in_the_price_of_goods.3F)
Taxes vary by location, date, and time.
The real reason is that stores want to make the price seem cheaper.
edit:
There’s a lot of excuses for why stores don’t include tax. I still stand by my comment that the real reason is stores want to make the price seem cheaper.
non-chain stores could definitely include tax if they wanted to (restaurants). And some do. I’ve seen some places that include tax. Gas stations prices include tax.
Just mentally add 6%-10% to your total, and you’ll be golden. Even children manage this pretty easy.
Taxes vary at every government level, from state to county to municipality. If you operate in more than one area, you want to standardize your prices to account for the buyer’s tax codes instead of changing prices on everything constantly based on new tax rules. You just kinda mentally round up for your purchase to account for stuff like taxes
Your typical sales tax is not shown on a tag as they’re mass produced and added to the product in packaging. Sales taxes vary greatly between the states/cities and they often change with little notice.
There are exceptions, like fuel, where the taxes are in the listed price.
Because .99 is marketable
I recently ordered something from an online store. To calculate sales tax, they asked for my zip code. I entered it and was then prompted to select whether I lived within the boundaries of a certain city or outside of it. The difference in rates between those options was a whole 2%.
As crazy as it is sales tax doesn’t just vary from city to city but in some places building to building.
It’s corrupt af but there’s a Starbucks in St. Louis that has its own taxing district just for itself.
Tax varies by State, County, City, and even school zone within a given city. What is and is not an item that is tax exempt varies widely, as do which people qualify for a tax exempt purchase when buying things. It is simply easier to add the tax at the till after all these variables have been calculated and easier for the customer to know what the specific tax is by listing it separate on the receipt.
Because we still hate taxes and so we can see how much we have to pay the government every time we buy something. It helps keep the government from constantly increasing sales tax without you knowing it. Incorporating it in the sticker price is the government’s way of hiding how much you actually pay them for the privilege of buying something.
Cities, counties and states/territories/tribal nations all individually tax products sold in stores. That means that sales tax can be very different depending where you are in a specific state.
>how do you know the exact price before checking out?
at physical locations, add 10% to the price, to ballpark. Online stores show you the total with tax before checkout.
Usually if I am physically in the store grocery shopping, I tend not to care. This is a very stark departure from my college/post college days when I had a mental calculation of everything I put in my cart, just so I wouldn’t exceed x dollar amount.
These days I am fortunate enough that I don’t have to do that. I get what I want.
The written price is what I’m charging you for my product. The tax is between you and the government, I have no part in it.
We ask ourselves the same question
Sales taxes are not national, but state, county, and city. So an item might have 8-10 different prices even within the same metro area, especially if metro area straddles a state line. Stores like to advertise nice looking prices like $4.99 or $599, not $5.14 or $637.47.
1. In many states, businesses are required to charge the sales tax separately for clarity/consistency – it’s illegal to include it in the listed price.
2. Sales tax rates often vary not just by state, but by county or town within a media market, and chain businesses generally want the price tags in each store to the match the advertisements they air for the whole media market (or nationally) to avoid confusion or accusations of bait-and-switch.
3. Sales taxes can vary within a short time period – for example, during the “tax free weekends” many states put on – and businesses don’t want to reprint all the price tags for those short periods to remove the tax.
4. For items that can be delivered across state lines (for example, furniture or appliances), the sales tax rate will vary by delivery address and may not be chargeable at all – so no sense including in the price.
5. As long as it’s not universally required to be included in the price, businesses that do that will appear to be more expensive than those that don’t, making them seem less competitive. Even if they put up a big sign saying “all taxes are included in prices!” Consumers aren’t rational, there’s a reason all prices end in 99.
6. There is little to no political pressure to change laws to facilitate including the tax in price. While most Americans would probably prefer taxes to be included in the price if you asked them, the salience of the issue is extremely low and not where most want to invest their political energy. Few care, because they’re used to it and it’s very predictable once you know how it works. It doesn’t produce difficulty in daily life especially since barely anybody pays with cash anymore (and most who do, don’t pay in exact change). People tend to be much more concerned about unpredictable fees like hotel resort fees, service fees at restaurants, surcharges for paying by credit card, etc.
As an example of what everyone else is saying; my parents live in a weird “unincorporated” neighborhood shared between different cities and counties within the metro area. Because of that I paid over $1k less in taxes for the truck I bought when I was still living with them than where I am living now in the neighboring city proper even though I moved only a dozen blocks away. I still have my amazon packages shipped to my parents place because I’ll save a dollar or two with only a five or so minutes walk to pick them up. Fuel on the other hand is cheaper in my area for some reason so my parents would drive the extra 8 blocks for it rather than the closer gas station only 4 blocks away from them. Since I live in this border area where four counties and five cities meet each other (or lack there of); I can see a bunch of slightly different prices for the same products because of the different tax codes between the varying governing bodies and jurisdictions.
And this little neighborhood is just a microcosm of the entire country.
I’ve read Europeans at least, do see similar in terms of having to pay import tax on some international purchases before delivery. It’s a pretty similar situation to sales tax here.
It isn’t a VAT, it’s a sales tax.
In other words, it isn’t a tax levied on the item. It is a tax on the sale. That’s why it is a separate, itemized line on the receipt.
Because you shouldn’t just accept theft as normal and baked into the price. Having the extra line reminds us that the government extorts their take from every purchase we make.
Tax is on the sale, not the item. Given that it’s usually weird decimal percentages (9.8% and 5.5%, in the two places I’ve lived, for example), businesses could list prices like $5.179, but they’re also often required to not do that
Our price structure isn’t set up with a tourist or visitor in mind. If you live in an area you kinda know what the tax is in that area.
And despite all the memes, most Americans can do math in their heads.
Because taxes don’t exist, except property and business.
Tax rates vary depending on several factors, predominantly location. In Maine, you can figure out what the final price of something will be by multiplying it by 1.055. Like many other things in this country, it’s a dumb system.
Because it isn’t. There really is no one reason why the US does it that way. We just do. No one cares except foreigners who aren’t used to it.
Taxes vary by location.
My county has a different tax rate than another county in the same state.
Basically it’s annoying to keep track of because taxes can vary slightly just a few miles apart.
There’s no law forcing them to final price things at each store, people dont care that much, so it’s easier to set base prices regionally and let the POS system figure out each local price. Often to the point that things are labeled at the distribution center for a region or nationwide
They don’t vary enough for consumers to worry about most of the time. The fact that it’s 8% in one town vs 8.1% in the next doesn’t affect whether I’ll buy something. That difference DOES matter as a business, though, since they have to track it all and prove they’re collecting the right amounts.
> how do you know the exact price before checking out? Is there a way?
Yes it’s called basic math. In Florida it varies from county to county. Sales tax is 6% here but additional depending on the county. Example, I live in Pasco county which has an additional 1% (discretionary tax, so 7% total tax) but drive to work in Hillsborough County what has 1.5% (discretionary tax, so 7.5% total tax). Discretionary tax is for different stuff. I know part of the discretionary tax for Hillsborough is paying for the Bucs (football) stadium that we the people vote on. A year or so ago there was a vote on the ballot about adding .5% for additional school funding. The tax has an expiration date as well so it ends after a while.
In Florida just basically add 1$ for every 15$ of the cost and it’ll get you close enough.