They do communicate, it's only CA law that sales tax on phones are for the unsubsidized price; it's not like either party is unaware of this. You also don't os

They do communicate, it's only CA law that sales tax on phones are for the unsubsidized price; it's not like either party is unaware of this. 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 :)