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We just think about the base price, but the taxes. Then at checkout you're told "oh, that number you had in your head? Add 5-20% more as a surprise"
It's a terrible system, very anti consumer. You never get used to it
Oh, and it also has the fun side effect of making sure nothing ends on a dollar amount
The whole argument of "it's cause there's so much variation in tax amount" never really made sense to me as an excuse. Like.. you'd print the labels at the store wouldn't you? So you just put the tax amount in the system for that store and print it.. the only way it makes sense is if for some reason you're shipping price tags across the country
Its so they can advertise a lower price.
There are often nation-wide or region-wide advertising campaigns that proudly display a price. If individual cities have different sales taxes, that would make it hard. Personally, I still don't find this to be a good reason. Just charge a single amount anyway and eat the costs in the high tax area. Price it in.
Edit: now that I'm thinking about it, many chain businesses are franchised. So each McDonald's (for example) is independently owned. So they couldn't just eat the cost in those areas.
We don't include the tax. You just expect what you pay at the till to be some percent more than the sum of shelf prices. It's a known number, 5% where I live except on a few untaxed items (which I should mention isn't the US, just nearby).
Who could have guessed u/CanadaPlus wasn’t American!
I mean, if you read my username it should be obvious. And it comes up often enough it was worth putting it in the username. It's just that not everybody does. and I'm going against OPs expectations by answering.
The average American does not include taxes in prices. This is also true in Canada.
That is so bizarre.
That's why they feel that taxes are robbery tbh. It mentally works against them.
Agreed
It's inconvenient for sure. Sales tax varies so much accross North America that I guess it's easier for them to advertise that way vs. custom signs for each province/state.
I would fully accept a law that allowed companies to advertise nationally the pre-tax price with a small disclaimer saying applicable taxes vary by location, and then require the in store price tags to reflect all taxes.
There's no excuse not to anymore. Yes it does vary, and a computer can easily adjust the price.
Many of us are in the habit of mentally calculating it wherever we live though.
For example, my state sales tax is 6.88%, my county has a .25% tax on top of that, and then there’s a metro area tax of 1% on top of that, my city does not impose a separate tax of their own, so total sales tax in my city is 8.13%.
When shopping we’ll do the mental math (roughly) and factor that in so it might say $39.99 + tax but I know that it’ll be a little under $44 with tax.
It’s inconvenient but, like most things, we get used to it and adapt. Also, while tax varies a lot by state, most of us don’t venture too far out of our home area so tax is roughly the same all the places we regularly go.
It would be nice to have the price listed as the price you pay but it doesn’t work as well with our current system.
I generally assume what I'm buying will cost 10% to 20% more from taxes and/or tips getting added at checkout. I agree it doesnt make sense and seems underhanded, they could post the actual prices if they wanted to.
As someone not used to it, I find it very annoying. Where I live the final sale price/cost to consumers is what must be advertised, by law. I remember car dealers attempted to omit delivery cost, a good while back, but that shit was shut down quick.
I think in pretax numbers and just expect the final price to be higher - how much higher I have no idea because not everything is taxed. It was a major pain in the ass when I only had cash cus I never knew how much to take with me. Now I only use credit cards so it’s much better.
I think that builds into the credit card trap.
You should not need to guess-timate how much you're going to spend, that is the issue.
If you want to pay in cash, that's it. Pick up the items, add it in your head, that's it. Witholding how much you are really going to spend by not applying all charges holds you hostage.
Yes, you can just put it to your card and pay it later but why?
It may help, but credit cards aren't the reason.
Sales tax is something that can be charged at all levels of government, including individual cities in some states. It is easier to advertise one pre-tax price than deal with the variance of advertising post-tax prices.
And I keep thinking my country's tax system is weird.
No way! That is ridiculous. That is essentially equating to create tax havens inside your own country. What is stopping people from high taxation states to just go for a shopping spree on a non-taxation one? Or even a city or town? Nothing. It makes no sense.
My country has a mainland and two autonomous regions. All taxation is designed centrally. VAT, special taxes, income, private and corporate, vehicles, land, house, etc, everything is established centrally. The autonomous regions do have the freedom to fine tune the end % of tax but really nothing else. They can't exempt a tax, just because.
shopping spree on a non-taxation one
You have discovered Delaware.
That is awful.
It gets worse.
A lot of incorporation law is done at the state level, so most corporations are incorporated in Delaware where there are no corporate taxes and specialized corporate law courts.
A lot of credit and gift cards are out of South Dakota because that state has favorable credit card and gift card laws.
A lot of the laws of the country are written at the state level by design.
A lot of convenience stores around me don't even have any prices shown on many items. Drives me crazy, but I guess many people are used to it? Sales tax is usually around 7% in most places I've been to, so if I know the price of an item, I know, roughly, what to expect.
No price means I won't buy. Because it means probably 200% mark up at least
We did a trip to the US that covered coast to coast by plane and then 5000k of driving back to the centre... And their pretend pricing sucked.
Every state we went to advertised a price, but what you actually paid varied by heaps.
Bought some clothes that were something like $700USD by the tag, and had $1000USD on hand... Which wasn't enough once they rang it up! Wtf?
That’s just called being scammed. There’s no 43% sales tax anywhere in the US.
Ignore it.
Sometimes I am like egh, that’s annoying and more than I expected and then carry on with buying whatever it is. But that is a more recent thing, now that am being more frugal. For like a decade I would say I never acknowledged it or thought about it.
As someone who lives in one of the states without sales tax, i used to hate it because nothing would ever be exact change, id see a candy bar listed for $1 but actually ifa 1.05 or aomething and now Ive gotta deal with a bunch of coins. Arizona iced tea for 99c... Nah bro you still need aother 12 cents (gotta pay the bottle deposit too)
Its not as annoying now that i pay for most stuff with a card, but in still resent all the other states that force people to do math.
I did "tax included" when I sold stuff but it's unusual. Yes we know there is tax, I know the tax rate here and it's not difficult to calculate the total. Food, like groceries, is not taxable here.
I will say though - my husband wants a car and I keep having to remind him to gross up the price when he sends examples because on big things it is a big charge.
When you say "people" you're really talking about the stores, right? The stores just put the price they charge, not the taxes which they don't get. Yes, taxes vary from state to state, but it's not like we're all going to different states every day. I know what the tax rate is in my area, and so I know to add that when I see a price in a store.
If you really mean "people" as in customers, it depends. If I'm telling someone that a store has a good price, I'll just quote the store's price. But sometimes when I'm talking about what I paid, I'll include everything "Wow, I can't believe this cart of groceries was $150..."
I've seen people discussing a cellphone offer that's like "$800 but you get $800 of bill credits over 24 months" and they would say it's a free phone. But you'd pay $800 plus tax up front and you'd not get that tax back.
Still a good deal, but it showed how many people were blind to the tax.
Whether or not I factor in tax is entirely dependent on the size of the purchase I'm making. For the vast majority of purchases I make on a daily basis, I don't think about it at all. 7% of $2.99 is negligible to me. However, if I'm making a large purchase, or if it's a purchase which I know is subject to additional taxes beyond the sales tax, then I might consider it. 7% of $2.99 may be negligible, but 7% of $29,999 is a significant amount all by its lonesome.
For most people, I'd imagine this is most common when it comes to purchasing vehicles, as those tend to carry large prices and special taxes which results in a significant increase in price. For example, I purchased a new vehicle a couple years ago for MSRP, but wound up paying several thousand dollars more than that due to various taxes and the registration fees. I didn't know exactly how much those surcharges would be (though I easily could have calculated them by visiting my state's Department of Motor Vehicles website and plugging a figure or two into their calculator) but I had a ball park idea which I could budget around. Also, I'm pretty sure the dealership I bought from provided an estimated total purchase price which included the fees for the locality it was located in. Unfortunately, most of that was irrelevant to me, as I had traveled from another state to purchase this vehicle, which illustrates the minor frustrations that an all-inclusive price tag would introduce in America.
Like, I don't think you're wrong for thinking it's odd, and yes, there are ways to fix it, but it's just such a non-issue (not to mention America's "touchy" relationship with taxation meaning these attempts to "fix" things would rapidly become politicized) that no one cares to do anything about it. As someone else said, we intuitively learn what the rough tax rate will be for our common purchases and just factor that in.
Usually no. Taxes are different depending on where you buy. We expect there to be 5 to 9% added on at checkout.