Regardless of what the practice is in Canada, I have zero faith in literally any US business to round down on anything, at anytime, for any reason at all. It will, I guarantee, be round up on everything.
Note that you can also, while you're at it, abolish rounding.
You already have this in some sense on gas pumps: the price advertised has taxes included so you are not always playing guess-the-final-total with your money. Just pass a law that requires fair advertising of the actual amount the purchaser will pay, taxes etc. included. If there are special circumstances that might make certain people exempt from a tax -- SNAP is sales-tax free, for instance -- there are several ways to handle that but it's clearer when phrased as a discount rather than as an evasion of a tax.
Well, yes, this...
I am European and during my brief stay in the USA the fact that taxes were added at the cashier was awkward.
I am sure you had your reasons and if you grow up in that sustem you won't notice much, but it looks a bit counterintuitive to foreigners.
It's insisted upon by anti-tax advocates, so that Americans always get reminded about exactly how much the government is adding onto the price. Otherwise, the theory goes, we would get too happy about taxes.
That happened in Washington state when Costco sponsored a privatization initiative to allow liquor to be sold by private stores and abolish the state stores. The private stores started advertising the non-tax price with tiny print saying that tax would be added at the register (when the state sold liquor, the price on the shelf included all liquor taxes). People were pissed thinking that the state had been ripping them off until they got to the register and found that the price was pretty much what they paid before. Actually they were paying a bit more, most people didn't read the initiative before voting on it. Now the stores print the total price in their advertisements.
Maybe I'm wrong, but I don't think there is any law that says businesses have to add sales tax on separately. Since it's the business who actually pays the tax not the consumer they could just take it out of their own profits.
However, the reason I think stores do this is: If store A is selling candy bars for $1 (+ $0.05 tax at register) and store B is selling candy bars for $1.05. Most people would buy their candy from store A because their prices are lower.
Sometimes stores will structure sales that way ("we pay the sales tax" sales), so I expect you're right.
The situation where it comes up is the idea of an American VAT. Because it applies the tax before the store even sees the good, the tax ends up baked into the price. And people like Grover Norquist have argued against a VAT specifically because of that: "The VAT is embedded inside the price of a good (as opposed to the U.S., where sales tax is transparent and on top of the price). As such, people forget they pay it, and European governments have found it too easy to raise the tax repeatedly over time."
Business collect and remit taxation on behalf of the customer, so no the business is not "paying" the taxes. It is the consumer that owes them the business is just collecting them for the government. For which the business gets a small fee to do this service for the government.
If the business did not collect taxes then you the customer owe that to the state still and are suppose to self report that and pay the owed taxed annually
This is the same as Tax withholding from a paycheck, you owe the taxes but your employer is collecting and forwarding them to the government on your behalf, the big difference here is the purchases are not tracked by individual tax payer
> If the business did not collect taxes then you the customer owe that to the state still and are suppose to self report that and pay the owed taxed annually
Interesting. But do people actually do this in practice? I wonder if states report what percentage of sales tax comes from businesses vs individuals.
In practice no people do not generally self report that is why there has been several high profile law suits from states wanting online businesses to collect state sales taxes on all sales shipped into the state
Before 2018 or 2019 unless a business had a physical presence in the state it was outsize the reach of that states laws on taxation, as the Federal government has the exclusive domain of regulating interstate transactions under the US Constitution.
However in 2018 or 2019 the Supreme court has ruled that a business shipping into a state provides enough "nexus" for a business to fall under state regulations on sales tax collection. All but one state now require any business shipping a product into the state with a total sales volume of more than $600 for that state must collect sales tax, one state says any sales at all you must collect.
So the "loop hole" of buying from out of state to avoid state sales taxes no longer exist as almost all businesses now need to collect all taxes for all taxing jurisdictions in the US of which there are around 10,000 different tax jurisdictions as many area's have city and/or county level taxes in addition to the state taxes making this is very complex issue
Companies like Amazon and Walmart in the past have advocated for some kind of National Standardization of Sale Taxes but that largely has gone no where as many states make up the majority of their revenue from 2 places, Property Taxes and Sales Taxes where the majority of Income Taxes go to the Federal Government
>>I wonder if states report what percentage of sales tax comes from businesses vs individuals.
Most states do have detailed reports of where sales taxes come from, in my state over 70% of sales taxes come from the sale of Automobiles as an example
Taxes are computed at the cashier because tax rates vary from state to state and city to city. If sales taxes were uniform then we would see more advertised prices including tax.
One exception is in advertised gasoline prices, which usually include all the taxes, including sales tax and special gasoline taxes.
At a gas station, they have between one and four prices (diesel, regular, premium, and premium plus, or whatever your station calls it). So it’s easy for them to adjust those four numbers. At a grocery store selling thousands or tens of thousands of items, it’s a huge task to set the price tag for each item. So instead (or so I’ve heard), prices tags are produced by the grocery store’s corporate office. This would be much more difficult to do if the price had to vary from town to town. Suppose this grocery store chain has a hundred stores. Instead of making ten thousand tags 100 times, you have to make 10 million tags entirely uniquely. This is even more difficult for things like clothes where the price is on a tag physically attached to the garment. Imagine if the sales tax went down in that town; every single article of clothing would need to be relabeled.
The price tags come on a 8.5x11 sheet, just like address labels. A stack arrives (monthly? Weekly? Not sure) from corporate in an envelope. I'm not sure what happens when the tag gets lost; fortunately those are usually the handwritten signs falling into carts. Price tags really should just be printed at the store.
I doubt if most price tags last more than a month at clothing stores, maybe a year at grocery/other large chain stores. Department stores and trendy fashion stores have too many sales and don't keep the same items in stock year round anyways.
It makes it impossible to do mass marketing with prices. Best Buy can send a flyer saying "Xbox One Only 199.99!" to everyone in Illinois. But if they had to include tax, it would be 219.99 or 214.99 depending on which side of my town you live in because they tax rate changes.
The biggest reason is that sales tax can be applied at the state level, then a county can add a bit more, and a city a bit more still. So for a national chain it's impossible to know the final price to put on an item until the consumer gets to the checkout register.
> Just pass a law that requires fair advertising of the actual amount the purchaser will pay, taxes etc. included.
"Just" anything in America is as OP pointed out an absolute nightmare left-vs-right debacle.
The "left" wants to have inclusive pricing for, as you point out, convenience and sanity while politicians on the "right" want to have taxes appended afterwards so that you are smacked in the face with how much the government is wasting your money every time you buy anything.
Absolutely not, I want to see the practice end on Gas Pumps.
Every business should be requried to adversite, print, and clearly mark the amount of the tansaction is going to taxation
Hiding taxation in the purchase price allows government to increase those tax rights with out facing the same amount of public back lash as they do when the taxation is calculated secretly from the transaction or advertised rate
This is why when come taxes increase their gas takes the hate and vitriol is directed at the "evil gas companies" increasing the rates when in reality it was a increase in gas taxation that cause the per gallon price to increase
One of the primary reasons I oppose a VAT style tax in the US is the vert nature of non-transparent taxation. People need to know exactly how much money the government is taken from them in any given transaction
In every single transaction? Why if there were some form you sent in and recieved every year that contain exactly the financial transation for that year between you and the state.. hmm.
Personally I think we need to do away with automatic tax holdings in general
People should have to actively hand over money to the government, see the money in their account, and then see it removed for the exact purpose of government taxation
This is the only way to hold government to account for their massive overspending, which today is abstracted away to the point that people believe their tax refund check is the "government paying me money" instead of what is really is, the government taking to much money from you and then giving you back what they over seized
Any abstraction in government funding is a negative for government accountability
If people had to physcially spend a payment larger than their mortgage every month to the government they would quickly start to ask "Why I am paying so much" and "what am i actually getting for this money"
Instead the government slyly takes the money before people even realize they had it, sure they get a pay stub but it is not "real money" that was ever in their physical possession, most people do not even look at their Gross income only the amount physically put into their bank account.
This subtle difference is factored into how government has structured taxation to ensure very limited accountability
Yeah like these do not have to be separate things. If I advertise a final price to you, "you will pay $4.95 for this thing," I can still communicate on the receipt that $0.50 of that went to sales tax, and if you are paying in a way that excludes taxes from being collected, e.g. SNAP benefits, there is no reason that you can't be charged only $4.45 for that because the tax is deducted from the advertised purchase price. If you are concerned about benefits that are "use 'em or lose 'em" you can always remit the tax to the person as physical cash so that there is transparency there. This is just a pareto inefficiency; there appears to be a way to make some folks better off without making any other folks worse off.
It's not merely "practice" in Canada, it's the law. And since most transactions are handled by software these days, it's pretty easy to implement and verify (jobs: secret shoppers). Subtler, businesses can try to game their prices to maximize rounding gains; also illegal (jobs: accounting, data analysis). For small businesses with antiquated tills, one should offer grants for upgrades and training (jobs: installation, manufacturing, tech support...).
> Subtler, businesses can try to game their prices to maximize rounding gains; also illegal (jobs: accounting, data analysis).
It's actually illegal there to set prices such that they will generally round in the business's favor? Talk about micromanaging…
If they change the tax rates do you have to update your prices so that they round evenly again?
A fairer policy might be "round random" (e.g. 1.23 rounds to 1.20 40% of the time and to 1.25 60% of the time, since .23 is 60% of the way from .20 to .25). That would be harder to game by manipulating the prices. However, you would need to certify that the rounding was actually random; the result wouldn't be obviously correct for any particular transaction, only in aggregate.
Everyone uses an electronic POS system and it will round however the manufacturer told it to round (which will be correctly). The only people you have to worry about cheating you out of 3-4 cents in a world without pennies (the maximum you can be cheated) would be people without electronic systems. Which is to say, no one.
I mostly meant that I don't have any faith that the code will work correctly. I'm not even assuming malice. There are all kinds of super simple rounding mistakes you could make that would mess up the rounding. Especially if you're writing for a market that you're not part of (eg, out-sourced coders living in one country, but writing POS code that is deployed in another country).
That said, do I think that someone, somewhere, has/does/will out of malice abuse this specific oft-ignored dark corner of the marketplace, for personal gain? Yeah, I absolutely think that:
I just disagree with this. We will see Wal-Mart and other chain retailers make their own POS software/systems.
3-4 cents isn't a lot. Unless it's added up by all of the people shopping in those places over the course of a year. The incentive to cheat the system is there, therefore the system will 100% be cheated. That's The American Way, in my experience.
Wal-Mart is also a huge corporation and every single attorney general, not to mention the FTC, would be delighted to learn that they're so clearly and unambiguously violating the law...
This kind of fraud would be so easy to detect I just can't see it occurring on any large scale. The problem would be with small "mom and pop" businesses that could do it for some time without being noticed.
So do you believe they are already screwing you out of fractional cents? There is already rounding going on, there's no guarantee that applying taxes yields a whole number of cents.
Honestly, all folks would have to do is get a receipt that shows how much tax you paid.
And even if they do always round up: It won't be that much - up to 4 cents per transaction. 125 transactions would only cost you $5 per month - and besides, businesses have actual costs to using cash. No pennies means less time handing out and counting change and less change to get from the bank. Not to mention the savings at the government level.
