I was looking at a grocery receipt, and there are three different tax rates depending on the items. The receipt doesn’t even specify which items are taxed at which rate - just the total at each percentage.
I understand the goal of lower or higher taxes on groceries is to incentivize purchasing healthier options over more processed foods, but does it really affect purchasing decisions when the final price of the items is opaque to the consumer?
As a regular European I never even understood why US shops list prices without tax. It feels just dumb. When I go to store here the store is required to show final price on tag - meaning including tax and recycling/author fee if there’s one. Seems much more user friendly.
As another European, I can at least understand why tax isn’t represented on a US (and Canadian) website since the US is as truly united as a dysfunctional family come inheritance time and tax rates are different from state to state, but to pull that in local stores is something I can only ever see as fraud.
Yeah, I was talking about local stores mainly. Online it’s understandable as every state has its own view on taxes, same as each state in EU (we’re not federation though).
Its to entice people to spend more.
I agree it’s dumb, but I’m also trying to understand how politicians think changing the tax rate for healthier or less healthy foods can possibly affect behavior in the USA when it’s set up this way in stores
There’s some evidence it somehow works https://publichealth.berkeley.edu/news-media/research-highlights/do-soda-taxes-work
But I’ve never known what I’ll be taxed on a specific item
That’s what’s so dumb with it! As I said, in EU you see the final price, including tax. So “healthier option” with lower tax would instantly be seen as cheaper than “unhealty” one with heftier tax. This way it could actually work.
Sales tax rates and fees are well known. In my locale, I know food and clothing (necessities) do not have sales tax while prepared meals and most other items do. I also know there’s a deposit on carbonated beverage bottles, vice taxes on cigarettes and alcohol and tourist taxes on downtown restaurants and venues.
I try not to go where the tourist taxes are. I used to try to avoid bottle deposits but realized that many small cans and bottles help my moderation while fewer larger ones do not. Although I do agree that integrating the taxes into the price would help with comparisons, having it called out separately helps with changing habits on entire categories
Actually the gas tax being integrated into the price probably has the opposite effect. I have no idea what I’m even paying for gas tax: it’s just included. But that also means that while I’ll compare gas prices to find the cheaper price (within reason), I never think about whether I should buy gas or not (well, that used to be true but knowing the many reasons not to buy gas’s means now I have an EV - taxes were no part of that)
I think the tax (including what is taxed and number of brackets) is state dependent. But generally speaking the idea is to not penalize people for buying necessities. But you are right, it is super confusing especially if not noted on the receipt. Check out Washington state’s rules if you want your brain to hurt: https://dor.wa.gov/education/industry-guides/restaurants-and-retailers-prepared-food/retail-sales-tax#:~:text=Sales of prepared food,food from retail sales tax.
Tax brackets usually applies to income tax. You are talking about sales tax which varies by state. Oregon doesn’t have sales tax and California doesn’t tax any grocery food. Maybe this is a discussion for the state you live in, not the whole USA.
We ignore the tax rates. It is what it is.
FWIW, both big chain grocery stores where I live (in Canada) mark the taxes charged on each item, albeit only with a single-character code that’s explained nearer the bottom of the receipt. I’m surprised that it’s legal anywhere in our respective countries to withhold that information.
And indeed, even though you can see the nontaxable items clearly on the receipt, that’s not made clear at the shelves where the prices are posted. That’s where they really need to show the price including taxes.
Some liquor stores in Canada, for example, show both prices: before and after taxes. I’ll let you guess which price is rendered in the smaller font.
In theory, lower tax means that you have more discrenary money available to buy things.
In Massachusetts I think it generally is listed on the receipt.
