I was looking at a grocery receipt, and there are three different tax rates depending on the items. The receipt doesn’t even specify which items are taxed at which rate - just the total at each percentage.
I understand the goal of lower or higher taxes on groceries is to incentivize purchasing healthier options over more processed foods, but does it really affect purchasing decisions when the final price of the items is opaque to the consumer?
We ignore the tax rates. It is what it is.
I think the tax (including what is taxed and number of brackets) is state dependent. But generally speaking the idea is to not penalize people for buying necessities. But you are right, it is super confusing especially if not noted on the receipt. Check out Washington state’s rules if you want your brain to hurt: https://dor.wa.gov/education/industry-guides/restaurants-and-retailers-prepared-food/retail-sales-tax#:~:text=Sales of prepared food,food from retail sales tax.
As a regular European I never even understood why US shops list prices without tax. It feels just dumb. When I go to store here the store is required to show final price on tag - meaning including tax and recycling/author fee if there’s one. Seems much more user friendly.
Its to entice people to spend more.
As another European, I can at least understand why tax isn’t represented on a US (and Canadian) website since the US is as truly united as a dysfunctional family come inheritance time and tax rates are different from state to state, but to pull that in local stores is something I can only ever see as fraud.
Yeah, I was talking about local stores mainly. Online it’s understandable as every state has its own view on taxes, same as each state in EU (we’re not federation though).
Even then the website can ask where are ye from and then display the appropriate prices if they really wanted.
They can do that for delivery costs, why not for taxes
I agree it’s dumb, but I’m also trying to understand how politicians think changing the tax rate for healthier or less healthy foods can possibly affect behavior in the USA when it’s set up this way in stores
There’s some evidence it somehow works https://publichealth.berkeley.edu/news-media/research-highlights/do-soda-taxes-work
But I’ve never known what I’ll be taxed on a specific item
That’s what’s so dumb with it! As I said, in EU you see the final price, including tax. So “healthier option” with lower tax would instantly be seen as cheaper than “unhealty” one with heftier tax. This way it could actually work.
America is a bit weird in that sales tax can differ between state and even municipality. Having different prices in a store two towns over isn’t very practical. This is different from how Europe does it, where taxes may differ between countries/states but not at the local level. Plus, with VAT there’s a system between EU countries to equalise VAT between countries when people show internationally.
Infuriatingly, bottle/can deposits often aren’t displayed on the price labels even in the EU. You come in with a two euro coin, buy a 2 euro bottle of your choice, and learn at checkout that your 2 euro coin isn’t enough to pay for the 3 euro bottle.
I know it’s different because you get your deposit back, but I think stores should be forced to show the deposit fees on the label. It’s not a huge amount of money, but it makes for some very annoying head math if you’re trying to buy something and only carry a little bit of cash.
I think part of it (not a big part, but part) is that taxes differ so greatly in the US because of so many governments’ hands in the pots that it would discourage business in one town and have everyone flocking to a nearby town with less taxes.
As it is, you pay what you pay and don’t really realize the difference unless you take time to notice. I’ve only become aware of it because I realized how different my usual order at McDonald’s will differ when I’m in different cities.
In one city, my Big Mac meal will be $10.62 but in the next, it’ll be $9.35 because the taxes differ depending on where you are buying this with local city, county, and state.
If McDonald’s in Everytown, Maine showed their actual Big Mac meal price of $10.62 but the next city over in Somewhere, New Hampshire showed their Big Mac meal price at $9.35, more people would drive a little further to Somewhere for the obviously cheaper price with Everytown McDonald’s locations would suffer.
So you’re saying it’s not ok to let people do informed decisions? Or are you saying that the city that charges less wants also to sell less?
Tax brackets usually applies to income tax. You are talking about sales tax which varies by state. Oregon doesn’t have sales tax and California doesn’t tax any grocery food. Maybe this is a discussion for the state you live in, not the whole USA.
FWIW, both big chain grocery stores where I live (in Canada) mark the taxes charged on each item, albeit only with a single-character code that’s explained nearer the bottom of the receipt. I’m surprised that it’s legal anywhere in our respective countries to withhold that information.
And indeed, even though you can see the nontaxable items clearly on the receipt, that’s not made clear at the shelves where the prices are posted. That’s where they really need to show the price including taxes.
Some liquor stores in Canada, for example, show both prices: before and after taxes. I’ll let you guess which price is rendered in the smaller font.
Good argument for the price inclusive of tax to be the price shown.
I think it’s fairly uncommon for sales taxes in the US to be intended to incentivize behavior - moreso, they are for funding local government and higher taxes are placed on things that are politically palatable in local elections - hotel rooms or restaurant/alcohol sales come to mind.
So I just don’t think we’re well practiced at mechanisms that make them work as a point-of-sale incentive, and changing the way a single class of items are priced would be complicated and surely receive pushback from retailers and the industry involved.
My belief that it’s intended to incentivize behavior is from talks about things like the “soda tax,” where some goods are taxed at a different rate to try to reduce consumption
I don’t understand how they can be effective when you don’t see the price on the sticker, though
