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Comment by beberlei | Hacker News Reader

suddenly the EU VAT system looks awesome :-)

The US system of local sales taxes doesn't look awesome ever. If there were one economic reform I would push in the US it would be advertised price is final price (i.e. if you say "I'm selling this for $9.99" then that's all you pay, and the taxes are all inclusive) this would pretty much force underlying tax reform as businesses lost their shit having to deal with the insanity.

Note that the disaster area that is US regulatory overlap means passing a law like this is probably impossible without constitutional amendment.

Right now in the US it's often difficult, and sometimes impossible, to know how much you'll actually be paying in any transaction. It's ridiculous, and from a pure Econ 101 perspective it's a first order problem in the market.

Its worst at the liquor store where taxes are some significant percentage more, so the price is $18.99 but I know I'll pay some amount between $22 and $27.

Tax Increment Financing is used so much (abused) by local jurisdictions for infrastructure improvements, sales tax will never go away. It's a mess.

TIF is a property tax financing scheme. Abuse or not, its use has very little impact on sales tax.

It has a very large effect on what shows up next to the "sales tax" label on your receipt. Sure if they were honest it would say "fee to make the developer's interest payments", but it never says that.

And unless you are extremely familiar with local tax law you have no idea which purchases are even going to be taxed. If you go to the grocery store and buy the following:

tampons

raw chicken

rotisserie chicken

prepared sandwich

bread and cold cuts

toilet paper

condoms

20 oz soda

12 pack soda

juice

milk

prepackaged donuts

donuts from the bakery

cat food

beer

DO you know which of those items are going to be taxed and at which rate? Me neither!

>Note that the disaster area that is US regulatory overlap means passing a law like this is probably impossible without constitutional amendment.

I actually don't think so. The FTC covers truth-in-advertising laws.

https://www.ftc.gov/news-events/media-resources/truth-advert...

Certainly trying to use Truth in Advertising was always my first thought, but Truth in advertising laws are pretty toothless and I imagine any attempt to do something like this using that mechanism would get tied up in the courts for a long time.

I would love someone to at least make the case -- it seems like a non-partisan thing, surely the free market types should be in favor of price transparency, while liberals should be against misleading consumers.

The free market types I know are generally opposed to requiring tax be included because they think it would hide the "true" cost of the tax from consumers. They seem to like when a consumer is disappointed by the difference between the base and "plus tax" price because they think it will motivate people to try to get sales taxes reduced or eliminated.

I agree, but only if they don't include the merchant's profit margin in the price, either.

Exactly: If someone wants to argue that there's a dollar-amount that represents a "deeper truth" -- as opposed the amount the customer actually has to pass over the counter -- then why stop halfway at taxes?

A rhetorical question, since obviously because it serves the agenda of the merchants, who want to set up a "let's you and him fight" situation between consumers and government.

If we really start peeling the onion, we can talk about the merchants' profit margins, and then also externalized costs in the form of stuff like pollution and bankruptcies (and the tax money spent to clean those up.)

> The free market types I know are generally opposed to requiring tax be included because they think it would hide the "true" cost of the tax from consumers.

In this case the "hidden cost" would be clearly printed on the receipt.

You just use tax software to do it. Then you can just classify each item. Most small businesses only sell a few thousand products and others sell less than a hundred. How does it take to classify all of those? A few hours tops. After that the software does the rest....condoms going to 32932 zip...taxable...raw rice going to 92322 zip...exempt. very easy for a computer to do. The software provider would do all the research.

I think his point was as a consumer it is difficult to know your final bill since some items are exempt, some are taxed at a lower rate, etc.

Yes, exactly.

This still requires vendors to correctly mark up their products-- to a level of detail that handles all the local rate differences, and shopping carts to be retooled to store said classifications and pass them to whatever tax-calculation service you need. Not to mention paying for the service to query.

It's probably less of a problem for someone starting from zero, but I'd imagine there's a type of vendor that's a huge nightmare. The firm that basically said "we can sell anything we can get from our vendor", and stocked their cart with thousands of SKUs, many of which exist only as lines in CSV files so they may not even know what they are offhand. The cart was probably built in the Eisenhower administration so good luck extending it.

It would be interesting to see some states offer a "trade convenience for savings" model-- rather than try to navigate a maze of regional rates and product categories to decide if a widget is taxed at 8.2% or 8.3, just file a one-page form and charge everyone 8.5% on everything. Saying "pay us $50 per year more in taxes, rather than spend $50k and ongoing service subscriptions to optimize the rates down to the penny" is a pretty compelling argument.

1) I was talking about a consumer in a grocery store not having a clue as to what they'll actually pay until they get to the register, not a company shipping products.

2) Zip codes have zero to do with taxing jurisdictions; zip codes merely tell you where the closest post office is.

> Note that the disaster area that is US regulatory overlap means passing a law like this is probably impossible without constitutional amendment.

Why would a law like that contradict with the constitution?

I've worked on price display for a large-ish company. The funny thing is that our company, and probably others, would really like to show all-in pricing! It's easier for us because we wouldn't have to do things differently in different countries.

But we can't make the switch unilaterally because if we're the only ones doing it, then we look more expensive than everyone else and lose sales. Even if the final price is the same, consumers tend to just look at the up-front cost when making buying decisions. So we'd need everyone in our market to switch, or nobody can. So basically it would need to be mandated by the government.

Yes it’s nuts and it seems like a popular thing to fix electorally. I think that it’s a case of lack of political imagination.

Yeah Australian GST is a flat 10% and doesn’t allow you to display ex GST pricing to the end customers where it applies.

I recall going to a cafe in India, looking at the menu price, handing over cash then being asked for more. It would be impossible for me to account for which taxes would be applied at what rate to work out the end price before paying.

I prefer it the way it is. Invisible taxes will be raised higher than visible ones.

This is so true. I'm not a smoker, but cigarettes are a great example of this as they are often sold as "tax priced in" because they are taxed at such an extra high rate compared to standard sales taxes.

As an example; the sales tax rate in my region is 7%, but cigarettes are then flat taxed $1.36 a pack so roughly 20% tax at the state level, plus often times there is an added "local option tax" which adds on top of this.

While I appreciate the simplicity of “tax-inclusive pricing”, I think that “tax is added” vs. “tax is included” pricing is highly important for transparency. Frustrating as it may be for other reasons, I like that a buyer is reminded every time they walk up to checkout how much they are paying the government for the privilege. I think that’s part of the reason why EU VAT rates are so much higher than US sales tax rates. With tax-exclusive pricing, buyers are very aware of the tax.

I also think it sets it up so that sales taxes are actually paid by the intended target - they buyer. When Ireland changed its VAT rate from 21% to 23%, I suspect very few coffee shops changed the price of their latte from €3.00 to €3.06. So it feels like the tax increase can end up being paid by the seller, not the buyer.

As someone from (and in) the EU, I'm very much aware of the VAT. It's almost literally printed on every fucking thing. It's certainly very much apparent on any bill, receipt, invoice, sales printout and whatever piece of paper or data we get during economic exchanges.

Since VAT is a tax that is paid by the customer but usually remitted to the tax authority by the merchant, it has to be shown on the receipt.

When I'm buying privately I care about the price I pay - not the price a business can pay when reclaiming the VAT. It's not like VAT is going away with next change of govt, or even with Brexit. Everything gives you a receipt breaking out the VAT or shows it in the online basket and checkout for those that care, or reclaim, so I don't see how it lacks transparency.

Why does it matter who of buyer or retailer covers the few pennies, or if retailer makes a small price change to stick at a .99 or .00 price point? Retailers have done this forever in both directions.

Hmm, always 30% or sometimes 8%?

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