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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

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.

roywiggins 6y ago
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." https://humanevents.com/2010/04/23/dont-give-obama-a-vat/ https://humanevents.com/2010/04/23/dont-give-obama-a-vat/
- Entalpi 6y ago
  I love how the argument being played is that VAT is used to fed a big government. Like the US is huge, it requires a large government..
syshum 6y ago
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
- thekyle 6y ago
  > 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.
  - sukilot 6y ago
    Of course they don't. That's why Jeff Bezos is a $100Billionaire and why people drive across state lines to go shopping.
  - syshum 6y ago
    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

roywiggins 6y ago

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." https://humanevents.com/2010/04/23/dont-give-obama-a-vat/ https://humanevents.com/2010/04/23/dont-give-obama-a-vat/

Entalpi 6y ago
I love how the argument being played is that VAT is used to fed a big government. Like the US is huge, it requires a large government..

syshum 6y ago

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

thekyle 6y ago
> 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.
- sukilot 6y ago
  Of course they don't. That's why Jeff Bezos is a $100Billionaire and why people drive across state lines to go shopping.
- syshum 6y ago
  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