California says the iPhone costs $599
clipperhouse.com
clipperhouse.com
I am all for paying my fair share of taxes, but when two groups in the same organization can't communicate and it costs me money, that upsets me.
This is one of the reason why policy wonks prefer a VAT instead of a pure sales tax; the accounting is easier and more objective.
You also don't ostensibly pay a 'subsidy', they're 'giving' you the $400 in exchange for a 2 year service contract, not explicitly baking the subsidy into the price (e.g. after your contract is up, you do not start paying less just because you've 'paid off' the phone). That's also not the imaginary cost of the phone; as someone who's lost an iPhone, there's nothing imaginary about that $400 :)
Why does the iPhone cost $599? The iPod touch, with similar components, costs $199. Are the phone chips that expensive, or are there licensing fees, additional regulatory requirements, etc?
More specifically, they can get people to sign up for $XX/month plans, which means Apple can get AT&T to pay them $399 for the hardware. There's no such deal to be made for the touch, thus it's $199.
As for the components, I'd be surprised if an iPhone off of the line in China would cost much more than $50.
apple can get people to pay over $1000 for an iphone. those phones that are sold unlocked in other countries that aren't subsidized go for well over $599 on ebay:
http://shop.ebay.com/i.html?_nkw=factory+unlocked+iphone+3gs...
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/ar...
While the State spends plenty of money, they also need to take it in. Last I checked the State was nearly bankrupt and needed to do whatever it could to raise money. Seems they are doing it.
Oh come off it; taxing baby formula at a higher rate than other goods might suck for people who aren't of means, but taxing luxury goods like iphones?
For example, let's say we have a uniform sales tax of 5%. A poor person with an income of $20k will spend almost all of that $20k during the year, paying 5% of her salary in taxes. (She might even borrow money and spend more than her income, meaning relative to her income the rate increases to more than 5%.)
Say for the sake of argument unpoor me makes $40k and I spend $30k, saving the remaining $10k. I pay $1.5k in taxes, more in absolute terms but less as a percentage of income (3.75%), which is the definition of a regressive tax.
There are other ways sales taxes tend to favor the unpoor. For example, a poor person will typically buy almost all goods locally and thus be subject to tax on all of them. This is not necessarily true of non-poor people -- more than half of my monthly purchases are tax-exempt because of where I make the purchase. (For example, when I buy software from American companies, neither Japan nor my locality nor most US states tax me.)
There are tweaks you can make to sales taxes which make them marginally "fairer" to the poor: exempting food and clothing, for example, which the poor tend to spend more on as a percentage of income than the rich. However, these tweaks get very complicated very fast (a lot of governments actually have a policy which sounds like "Exempting food sales but taxing prepared food sold for immediate consumption unless it is take-out except taxing hot take-out." I wish I was joking. My sympathies in advance to anyone who writes POS software for French bistros.) These exemptions also tend to cost the state a lot of money, because non-poor people spend lots of money on food, clothing, etc.
Anyhow, long story short: sales taxes are, and must always be, a regressive tax on the poor.
That said, I will immediately concede that the iPhone falls into a somewhat different price bracket than that.
This sort of thing is absolutely true here in SF. For example, buying a sandwich at Subway doesn't usually incur a sales tax. But answer "yes" to "Would you like it toasted?" and suddenly your $5 footlong is now ~$5.50 courtesy the State of California. See http://thomashawk.com/2008/06/cheap-bastard-says-dont-order-...
http://www.boe.ca.gov/pdf/reg1603.pdf
“Hot prepared food products” means those products, items, or components which have been prepared for sale in a heated condition and which are sold at any temperature which is higher than the air temperature of the room or place where they are sold. The mere heating of a food product constitutes preparation of a hot prepared food product, e.g., grilling a sandwich, dipping a sandwich bun in hot gravy, using infra-red lights, steam tables, etc. If the sale is intended to be of a hot food product, such sale is of a hot food product regardless of cooling which incidentally occurs. For example, the sale of a toasted sandwich intended to be in a heated condition when sold, such as a fried ham sandwich on toast, is a sale of a hot prepared food product even though it may have cooled due to delay. On the other hand, the sale of a toasted sandwich which is not intended to be in a heated condition when sold, such as a cold tuna sandwich on toast, is not a sale of a hot prepared food product. When a single price has been established for a combination of hot and cold food items, such as a meal or dinner which includes cold components or side items, tax applies to the entire established price regardless of itemization on the sales check. The inclusion of any hot food product in an otherwise cold combination of food products sold for a single established price, results in the tax applying to the entire established price, e.g., hot coffee served with a meal consisting of cold food products, when the coffee is included in the established price of the meal.
Good golly, I am so glad I don't have to program anything like that in my shopping cart...
Doubtful; how about a sales tax that exclusively applies to mega-yachts?
Let me guess, CA has low taxes on property, so they have to tax everything else?
Assuming the same level of property taxes, others must pay more, making the state unattractive long-term. Does this mean overall tax revenue declines eventually?
This statement is true for everywhere, not just CA. Why should it be different here?