8 ms·

do not include sales tax in advertised prices I live in Canada and we do the same thing here. I think it’s a good thing to remind everyone of sales taxes at ch

do not include sales tax in advertised prices I live in Canada and we do the same thing here. I think it’s a good thing to remind everyone of sales taxes at checkout time. Sales taxes are regressive taxes. We should get rid of them in favour of a more progressive tax, such as land value tax. Laws that mandate hiding sales tax by including it in the advertised price only serve to entrench a tax that should be repealed. Edit: I just wanted to note that the vast majority of people I see defending sales taxes (i.e. VAT) are Europeans and the people opposed are North Americans. Putting aside the argument over whether it’s a good idea or not, I think this is good (albeit anecdotal) evidence that hiding/showing the tax in the purchase price at checkout affects people’s opinion of the tax.

this_was_posted 7y ago
I'd be interested to hear your reasoning for why you think sales tax is so bad. Personally I see it as one of the more reasonable ways of taxing people, as for every product sold the government/society had a part in making the sale of the product possible.
- mikepurvis 7y ago
  It's regressive because poor people spend a greater proportion of their income (like, all of it) on retail purchases, so they pay the rate (13% currently) on all their income. Where middle and upper class people who sit on money, invest it, whatever pay a much lower effective rate.
  - Fjolsvith 7y ago
    It is called opportunity. Poor people in America are not forced to remain poor. They can (and do) improve their lot in life, and take advantage of being not poor like the other not poor people.
    - deleted 7y ago
      [deleted]
    - unreal37 7y ago
      I am not going to downvote you, but that's just not always correct. Plenty of people have come from nothing to become billionaires. (Oprah!) But plenty of people are trapped in a situation and can't just remove themselves from those traps. Not everyone can learn Python and make $65 per hour by next week. Let's have empathy for people who really want to do better but can't, and see if we as a society can help them.
      - stallmanite 7y ago
        I think it’s an ugly undercurrent lately where everybody has to be super exceptional/motivated/passionate/etc or they’re worthless and deserve to be discarded by society. Every member of an animal population can’t be exceptional. Are we just doing eugenics rube-goldberg style?
  - eitland 7y ago
    Around here VAT is split so you pay full VAT on general things and services, half VAT on food and no VAT on electrical vehicles (for now I think).
  - itcrowd 7y ago
    I don't understand your point. Even the rich will have to pay 13% once they spend the money.
    - danaris 7y ago
      But they won't. Spend it, I mean. At least not on things where VAT is relevant. Most people, when money comes in, they spend it on things, so it immediately has to also pay VAT. If they're lucky, they may have some savings, but it's going to be on the order of 2-3 months' worth of income. Rich people make orders of magnitude more money, and mostly need to spend the same order of magnitude to live as the rest of us. The money beyond that, they mostly don't spend on the same kinds of things. After all, what would you do with a million dollars' worth of soap? There's no VAT on lobbying, on buying a house in the Caymans, on hiring six people to clean the mansion. VAT, like all consumption taxes that aren't highly targeted, is hugely regressive.
      - itcrowd 7y ago
        > But they won't. Spend it, I mean. At least not on things where VAT is relevant. If we can agree that the VAT is levied because the government has added some value to each product sold (value added tax..) then I don't see why spending money on VAT-exempt items makes VAT a bad tax. If you spend it on labor, housing, there are taxes associated with that other than VAT. Lobbying and charities might be tax-deductible or exempt, that is another discussion. I think your point is that regressive taxes are bad, is that a fair analysis? I don't agree with that.
        danaris 7y ago
        I mean, I believe that regressive taxes are bad. My point, however, is merely that VAT is a regressive tax.
        itcrowd 7y ago
        I agree it is a regressive tax. Re-reading my comment I can understand that it may seem that I don't agree with that. Sorry about that. However, I fail to see why regressive taxes are bad in general and why VAT is bad in particular. I was originally interested in the question by someone else before me: > I'd be interested to hear your reasoning for why you think sales tax is so bad.
- eitland 7y ago
  Probably intentionally misunderstanding but bear with me: Sales tax is bad because it is not on the sticker. Guess my and every europeans surprise when we realize that what we have to pay not the sum of the prices on the goods we buy, but that sum plus some more. VAT is a whole lot more reasonable as the price on the sticker is the price you pay is the sum of the prices on the stickers ;-) That said: VAT seems kind of reasonable to me but I will be happy to hear why ut isn't.
  - chongli 7y ago
    It’s regressive because rich people pay a smaller total percentage of their income in VAT, compared to poor people. That’s the definition of a regressive tax. Progressive taxes flip that trend. A land value tax is progressive because rich people tend to own more land and thus end up paying more tax, percentage-wise, than poor people.
    - evanpw 7y ago
      The progressive / regressive terminology takes it for granted that income is the right denominator to measure against, rather than consumption, which is not obvious in my opinion.
      - chongli 7y ago
        Are you implying that consumption is a bad thing and we should discourage it? That would put consumption taxes in the category of Pigovian taxes [1] in your eyes. If that is the case, and other sales tax supporters agree with you, then it's not obvious from this discussion. In my experience, it's generally been the case that rich people are anti-consumption, at least on a personal level. Poor people often splurge on luxuries to relieve some of the pressure of grinding poverty. They buy things to signal status in order to attract a partner. A sales tax on luxuries like this is effectively a wealth transfer from the poor to the rich, not altogether dissimilar to government-run lotteries which fund scholarships. [1] https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax
madsbuch 7y ago
VAT is only regressive if you assume that everybody have a constant spending regardless of their income. In practice I think people with a higher income also spend more, however, probably not linear to their extra income. In practice, sales tax is probably progressive, but not to the same extend as, eg. income tax. Furthermore, we should probably consider increasing the sales tax as it limits the consumption. This is highly necessary given our current ecological situation (In Denmark, where i live, the sales tax is 25%).
- throwaway66920 7y ago
  VAT != Land Value Tax Land value tax taxes landowners on the unimproved value of the land (that is, your land disregarding whatever’s built on it).
  - hombre_fatal 7y ago
    The post you're responding to did not confuse the two.
- gnicholas 7y ago
  Sales taxes are definitely regressive (as that word is used by policy makers) because low-income people spend closer to 100% of their income than high-income people. The definition of regressive is a tax that takes up a larger percentage of income for low-income than high income. Source: I used to be a tax lawyer.
  - ceejayoz 7y ago
    It should be noted that VATs can be implemented in a progressive manner. Give everyone (or anyone under a certain income) an exemption that covers VAT for necessities, exempt items like rent/utilities from it, etc.
    - gnicholas 7y ago
      Sure, although there are implementation issues because of the incentive for straw man purchasing. Are you aware of any jurisdictions where low-income purchasers are given additional exemptions? I would think it would be easier to use transfer payments (like SNAP) to ensure that the exemption is not used for the benefit of non-low-income individuals. Alternatively, you can have a prepaid or postpaid refundable VAT, where individuals can get their VAT refunded (up to a limit) based on income.
NeedMoreTea 7y ago
VAT specifically zero rates or reduces rate on many of the necessities. Which makes it far less regressive than an across the board sales tax. To name just a very few: Children's clothes, food, books, and public transport are all zero rated and in the UK at least there's a lower rate on utilities.
- gnicholas 7y ago
  Many sales taxes also exempt necessities, like grocery items and clothes under certain cost ($100 per item). I was surprised that when I bought clothes at a not-inexpensive retailer in NYC recently there was no sales tax.
labawi 7y ago
In probably all European places I've seen, final consumer price is most prominently displayed (what I most care about). That doesn't mean VAT is hidden. It is clearly displayed, often in shop labels, but also required on receipts with each item (VAT rate, total), and a summary of individual VAT rates (rate, base, VAT). People I know are well aware of the taxes here, both VAT, income taxes and mandatory health/benefits payments. I think I would be quite annoyed if the taxes were omitted from the price until the cashier calculates it (or if I'm supposed to do mental gymnastics). Do you mentally calculate total price if the taxes are different? Or just apply a constant factor?
- oefrha 7y ago
  I for one either mentally multiply by 1.1 for an upper bound or don’t bother at all, mostly the latter, because (a) different items can be taxed differently; (b) different states (sometimes even different cities) have different tax rates. For the record I hate it because I only care about the out-of-pocket costs. Same goes for tips.
- chongli 7y ago
  I think I would be quite annoyed If you would be annoyed, then VAT is hidden in the most important sense. It's like a mosquito that can bite without making you itchy so that you don't notice it. Yes, everyone may be aware that mosquitos exist but without the annoying reminder they can do a much better job spreading malaria to unwitting people. VAT, being a sales tax, is a wealth transfer from the poor to the rich. The fact that you don't have to calculate it at checkout is a point against it, not in favour of it.
jogjayr 7y ago
I thought Canada had sales tax rebates based on income to smooth out some of the regressiveness?[1] 1. https://en.wikipedia.org/wiki/Harmonized_sales_tax#Individual_HST_credit https://en.wikipedia.org/wiki/Harmonized_sales_tax#Individua...

this_was_posted 7y ago

I'd be interested to hear your reasoning for why you think sales tax is so bad. Personally I see it as one of the more reasonable ways of taxing people, as for every product sold the government/society had a part in making the sale of the product possible.

mikepurvis 7y ago
It's regressive because poor people spend a greater proportion of their income (like, all of it) on retail purchases, so they pay the rate (13% currently) on all their income. Where middle and upper class people who sit on money, invest it, whatever pay a much lower effective rate.
- Fjolsvith 7y ago
  It is called opportunity. Poor people in America are not forced to remain poor. They can (and do) improve their lot in life, and take advantage of being not poor like the other not poor people.
  - deleted 7y ago
    [deleted]
  - unreal37 7y ago
    I am not going to downvote you, but that's just not always correct. Plenty of people have come from nothing to become billionaires. (Oprah!) But plenty of people are trapped in a situation and can't just remove themselves from those traps. Not everyone can learn Python and make $65 per hour by next week. Let's have empathy for people who really want to do better but can't, and see if we as a society can help them.
    - stallmanite 7y ago
      I think it’s an ugly undercurrent lately where everybody has to be super exceptional/motivated/passionate/etc or they’re worthless and deserve to be discarded by society. Every member of an animal population can’t be exceptional. Are we just doing eugenics rube-goldberg style?
- eitland 7y ago
  Around here VAT is split so you pay full VAT on general things and services, half VAT on food and no VAT on electrical vehicles (for now I think).
- itcrowd 7y ago
  I don't understand your point. Even the rich will have to pay 13% once they spend the money.
  - danaris 7y ago
    But they won't. Spend it, I mean. At least not on things where VAT is relevant. Most people, when money comes in, they spend it on things, so it immediately has to also pay VAT. If they're lucky, they may have some savings, but it's going to be on the order of 2-3 months' worth of income. Rich people make orders of magnitude more money, and mostly need to spend the same order of magnitude to live as the rest of us. The money beyond that, they mostly don't spend on the same kinds of things. After all, what would you do with a million dollars' worth of soap? There's no VAT on lobbying, on buying a house in the Caymans, on hiring six people to clean the mansion. VAT, like all consumption taxes that aren't highly targeted, is hugely regressive.
    - itcrowd 7y ago
      > But they won't. Spend it, I mean. At least not on things where VAT is relevant. If we can agree that the VAT is levied because the government has added some value to each product sold (value added tax..) then I don't see why spending money on VAT-exempt items makes VAT a bad tax. If you spend it on labor, housing, there are taxes associated with that other than VAT. Lobbying and charities might be tax-deductible or exempt, that is another discussion. I think your point is that regressive taxes are bad, is that a fair analysis? I don't agree with that.
      - danaris 7y ago
        I mean, I believe that regressive taxes are bad. My point, however, is merely that VAT is a regressive tax.
        itcrowd 7y ago
        I agree it is a regressive tax. Re-reading my comment I can understand that it may seem that I don't agree with that. Sorry about that. However, I fail to see why regressive taxes are bad in general and why VAT is bad in particular. I was originally interested in the question by someone else before me: > I'd be interested to hear your reasoning for why you think sales tax is so bad.
eitland 7y ago
Probably intentionally misunderstanding but bear with me: Sales tax is bad because it is not on the sticker. Guess my and every europeans surprise when we realize that what we have to pay not the sum of the prices on the goods we buy, but that sum plus some more. VAT is a whole lot more reasonable as the price on the sticker is the price you pay is the sum of the prices on the stickers ;-) That said: VAT seems kind of reasonable to me but I will be happy to hear why ut isn't.
- chongli 7y ago
  It’s regressive because rich people pay a smaller total percentage of their income in VAT, compared to poor people. That’s the definition of a regressive tax. Progressive taxes flip that trend. A land value tax is progressive because rich people tend to own more land and thus end up paying more tax, percentage-wise, than poor people.
  - evanpw 7y ago
    The progressive / regressive terminology takes it for granted that income is the right denominator to measure against, rather than consumption, which is not obvious in my opinion.
    - chongli 7y ago
      Are you implying that consumption is a bad thing and we should discourage it? That would put consumption taxes in the category of Pigovian taxes [1] in your eyes. If that is the case, and other sales tax supporters agree with you, then it's not obvious from this discussion. In my experience, it's generally been the case that rich people are anti-consumption, at least on a personal level. Poor people often splurge on luxuries to relieve some of the pressure of grinding poverty. They buy things to signal status in order to attract a partner. A sales tax on luxuries like this is effectively a wealth transfer from the poor to the rich, not altogether dissimilar to government-run lotteries which fund scholarships. [1] https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax

madsbuch 7y ago

VAT is only regressive if you assume that everybody have a constant spending regardless of their income. In practice I think people with a higher income also spend more, however, probably not linear to their extra income. In practice, sales tax is probably progressive, but not to the same extend as, eg. income tax. Furthermore, we should probably consider increasing the sales tax as it limits the consumption. This is highly necessary given our current ecological situation (In Denmark, where i live, the sales tax is 25%).

throwaway66920 7y ago
VAT != Land Value Tax Land value tax taxes landowners on the unimproved value of the land (that is, your land disregarding whatever’s built on it).
- hombre_fatal 7y ago
  The post you're responding to did not confuse the two.
gnicholas 7y ago
Sales taxes are definitely regressive (as that word is used by policy makers) because low-income people spend closer to 100% of their income than high-income people. The definition of regressive is a tax that takes up a larger percentage of income for low-income than high income. Source: I used to be a tax lawyer.
- ceejayoz 7y ago
  It should be noted that VATs can be implemented in a progressive manner. Give everyone (or anyone under a certain income) an exemption that covers VAT for necessities, exempt items like rent/utilities from it, etc.
  - gnicholas 7y ago
    Sure, although there are implementation issues because of the incentive for straw man purchasing. Are you aware of any jurisdictions where low-income purchasers are given additional exemptions? I would think it would be easier to use transfer payments (like SNAP) to ensure that the exemption is not used for the benefit of non-low-income individuals. Alternatively, you can have a prepaid or postpaid refundable VAT, where individuals can get their VAT refunded (up to a limit) based on income.

NeedMoreTea 7y ago

VAT specifically zero rates or reduces rate on many of the necessities. Which makes it far less regressive than an across the board sales tax. To name just a very few: Children's clothes, food, books, and public transport are all zero rated and in the UK at least there's a lower rate on utilities.

gnicholas 7y ago
Many sales taxes also exempt necessities, like grocery items and clothes under certain cost ($100 per item). I was surprised that when I bought clothes at a not-inexpensive retailer in NYC recently there was no sales tax.

labawi 7y ago

In probably all European places I've seen, final consumer price is most prominently displayed (what I most care about). That doesn't mean VAT is hidden. It is clearly displayed, often in shop labels, but also required on receipts with each item (VAT rate, total), and a summary of individual VAT rates (rate, base, VAT). People I know are well aware of the taxes here, both VAT, income taxes and mandatory health/benefits payments. I think I would be quite annoyed if the taxes were omitted from the price until the cashier calculates it (or if I'm supposed to do mental gymnastics). Do you mentally calculate total price if the taxes are different? Or just apply a constant factor?

oefrha 7y ago
I for one either mentally multiply by 1.1 for an upper bound or don’t bother at all, mostly the latter, because (a) different items can be taxed differently; (b) different states (sometimes even different cities) have different tax rates. For the record I hate it because I only care about the out-of-pocket costs. Same goes for tips.
chongli 7y ago
I think I would be quite annoyed If you would be annoyed, then VAT is hidden in the most important sense. It's like a mosquito that can bite without making you itchy so that you don't notice it. Yes, everyone may be aware that mosquitos exist but without the annoying reminder they can do a much better job spreading malaria to unwitting people. VAT, being a sales tax, is a wealth transfer from the poor to the rich. The fact that you don't have to calculate it at checkout is a point against it, not in favour of it.

jogjayr 7y ago

I thought Canada had sales tax rebates based on income to smooth out some of the regressiveness?[1] 1. https://en.wikipedia.org/wiki/Harmonized_sales_tax#Individual_HST_credit https://en.wikipedia.org/wiki/Harmonized_sales_tax#Individua...