Comments that are bringing up taxes (which are totally exempted by this bill anyway) and tips (with one small caveat) are completely missing the point.
You can have a debate about how to display those items on a price list, but everyone knows about them and they are expected. The whole point of this bill is to prevent bait-and-switch, where loads of unknown or variable fees are tacked on after the price is initially shown.
The one caveat I'd say about a tip is if it's mandatory. E.g. if a place requires a minimum tip amount for large parties, it's no longer a tip, it's appropriately called a service charge.
Traveling to the US is for most Europeans a mightmare on this point. We are used to have a price that includes the taxes, services, delivery, wathever, you pay this much for this good ot service, and not an anachronistic 'tip' incantation for which you have to be tuned in to the latest local vibes so as not to unintentionaly run afoul of some obfuscated social rules, or you have to wip out your phone to google tax rates and calculate these on in step 2.
'Every one knows' is a very US centric view, which even I doubt is true given the degree of illiteracy and math deficiency in the overall population.
> have to be tuned in to the latest local vibes so as not to unintentionaly run afoul of some obfuscated social rules
You do realise you are travelling to a foreign country, right? This rings to me like Americans who travel to Spain and complain about the siesta, or Argentina and how late they dine.
Lots of local government means taxes change over smaller distances in America than most of the world. Also, most retailers here use paper labels—a result of historically-low inflation expectations. It’s easier to implement that complexity at check out than on the shelves. (I’d also guess that America’s credit card use means more check-out stations are digital than in much of the world.)
Add to that a cultural distrust of taxation and government, a decreasing tendency to use cash and a higher income per capita and you have a genuine difference in preferences.
> Lots of local government means taxes change over smaller distances in America than most of the world.
> cultural distrust of taxation and government
> a decreasing tendency to use cash
> higher income per capita
Really don't see how any of the points above are an obstacle to putting the ~actual~ price of a product on paper.
> Also, most retailers here use paper labels
Great! Makes it even easier to printout the actual price. 1) Retrieve base price from database 2) Add local tax 3) Add whatever other "hidden" cost is needed 4) Printout label.
You can't run a national "$5 footlong" or "dollar menu" national ad campaign if some states charge taxes on prepared food and some don't, and of those states that charge taxes, some require tax inclusive pricing and some don't. Tax-inclusive pricing isn't something that can be solved with a state law.
>You can't run a national "$5 footlong" or "dollar menu" national ad campaign if some states charge taxes on prepared food and some don't, [...]
You can, if you change your prices in every state so that with added taxes, it adds up to $5 for the consumer. We don't have to accommodate our system of sales taxes to make it more convenient for national corporations to make $5 foot-long campaigns.
Even if you have a big asterix there for that special tax excluded from the price occasion it will already make lives a lot easier. Such a weird hill to die on.
An even bigger issue is internet purchases and car purchases. Cars are taxed at the local sales tax rate of where the buyer lives. Internet sales are taxed at the state sales tax rate where the buyer lives.
Same in Europe where our ‘state-sized’ countries have different taxes but Amazon has no issue applying a 21% sales tax real time when I order from their .de site where a 20% tax is the local norm.
> Really don't see how any of the points above are an obstacle to putting the ~actual~ price of a product on paper
The pieces of paper are in multiple places. The bill is calculated in one place. Doing things in multiple places is more costly and error prone than doing it in one. (Also, the paper being physical means a physical person must update it. The POS can be remotely managed.)
Here is New York State's guide on clothing and footwear taxes [1]. (It's particularly well documented.) If any one of those counties makes a change, you're now proposing someone run through the entire store to update the affected labels or else risk lying about the price. That's manageable for a multinational. It's bonkers for a small shop owner. Instead, their POS is remotely updated (worst case, they get a bulletin to punch in a code) and when the barcode is scanned, the system figures out whether it's $110 or less and if it's really a costume or not.
If consumers valued it, tax-inclusive pricing might be worth the effort. But in America, we don't. The number isn't big enough, and I'm swiping or tapping either way. (Cash-only stores do tend to be tax inclusive, at least in New York, but that's because they're usually not paying the whole tax.) As I said, I can't remember finding it helpful when I travel to tax-inclusive priced countries. Surprising as it may seem, this really is simply a cultural preference. No right answer.
The store knows what to charge, they chose not to put it on the shelf label. When prices change, people change the shelf label, whether it is paper or ePaper tags is irrelevant to having the tax added in or not. What seems 'bonkers' to you has been standard practice in most of the world for decades.
> When prices change, people change the shelf label
This isn't free. That's someone's time and energy spent on something I, as the consumer, don't care about. Why? I'd much rather have that person available to help, ready at the counter or frankly at home or in a park enjoying their life.
What has meaning for you doesn't for me. I don't value having a precise price at selection versus purchase. At all. Like most Americans. That doesn't mean I don't see the value in your argument, just that I reject it as something that matters to me.
> What seems 'bonkers' to you has been standard practice in most of the world for decades
Not remotely comparable in terms of rulebook complexity. Also, income: if you want to find tax-inclusive round pricing in America, go to impoverished neighborhoods. There, every nickel counts and folks pay cash--it makes sense to spend the effort to precisely message pricing ex ante.
Also, in most of the world posted prices either aren't a thing or are completely negotiable. Haggling at the point of sale isn't a thing in day-to-day America.
The workers at a grocery store are already spending time setting and changing price labels across the store on a regular basis. (Such as for the many changing sales most stores have.) They often have a digital, hand-held label printer. It would be extremely simple for that printer to just print the local sales tax on the label.
Not to mention the vast amount of online shopping Americans do, where it would be trivial to include a local sales tax. (Every online store I'm aware of already immediately asks for your location and tells you to search for the nearest location anyways.)
I also reject the idea that most Americans wouldn't value this. I would bet money most Americans would prefer it -- they just aren't aware that other countries are capable of doing things better.
It's not free but it is negligible relative to routine relabelling. How many times do you think the tax rate changes per year? Maybe twice, at most, if the government budget is facing some major upheaval. More likely is every few years. Compared to the number of times the store will put things on sale or change the prices, that is negligible.
I concede that my other comment saying "there's no reason for it not to be [included in the price]" is inaccurate, cause this is a reason. But also, how often does sales tax change that this is a real issue?
> If consumers valued it, tax-inclusive pricing might be worth the effort. But in America, we don't.
That's not true. I would guess the vast majority of consumers would at least slightly prefer that the tax be included in the display price. The problem is those consumers aren't an organized interest group, whereas retailers are. It's not a "cultural preference"--it's just the inability of the political system to address large but diffuse problems.
I sincerely doubt that. I prefer to know how much of the price is from taxes because of transparency, as I mentioned in another comment on this thread.
Furthermore, literally everywhere I’ve lived in America, I had 3+ local sales tax rates within my typical shopping range and it’s nice to know which areas have lower rates so I can preferentially make larger shopping trips there.
>I prefer to know how much of the price is from taxes because of transparency, as I mentioned in another comment on this thread.
In the current system, to get that information you have to compare the label cost to the cost you paid. How is that more simple and convenient than looking up sales taxes in your area, or mandating they be displayed on labels in addition to price?
I don’t want taxes hidden inside the price of an item. It’s much better for consumers (and voters) to be aware of how much of each purchase goes to taxes.
I've never met an American who prefered the system of not showing the full price on the shelf. The system exists entirely to obfuscate prices and confuse less price-conscious consumers. It is hardly culture.
sorry, no, it doesn't. Taxes, by law, must be calculated at the point of sale. A penny on each of 5 items could sum to enough to bump the tax on the overal total by a penny. You're not allowed to "round" that extra tax away by computing the tax individually on the items.
I did word that travelling part poorly and you are right to call that out.
Thing is, leaving aside foreigners, there seems to be such an intrinsic contradiction between the 'everyone knows' and the 'it is so complex we can't even put it on the store shelf price label'.
Over here (Europe) for better or worse near 100% store checkouts are digital, regardless of wether you pay with credit or debit card. We get the correct price we will pay displayed on store shelves. We get a breakout of tax on the PoS ticket. In most places we also get a breakout of the price and the promo on the ticket (as in e.g. buy 2 get one free promos).
Yes. I am biased by experience, but I fail to see how not knowing how much you will pay for someting when and where you make the decision to buy it, that is when you take it of the shelf and put it in your cart, can be an advantage you would argue for.
"Everyone knows" is indeed US-centric in this case, but when we are talking about the state of things where it relates to a US state's law, the US-centric view is entirely fine and should be expected.
If we were talking about, say, a French law, I would expect the default assumption to be French standards and customs.
I would expect that if someone gives you an invoice, or advertises a price, the amount you pay is the amount listed. Otherwise it's basically fraud, or at least false advertising.
It is because you are listening to bullshit online too much.
I have lived in the US my whole life and I can't remember that last time I left a tip for anything besides a place that you sit down to eat and someone brings you food.
My first job was delivering pizza and that is something with a long social norm of tipping. A tip was a nice bonus but if someone didn't tip it didn't matter because someone else people would tip an irrationally large amount. I didn't think bad of those that didn't tip, I just assumed they were that broke.
It is not that "every one knows" it is that no one cares about this in the real world the way they do when grandstanding on social media.
When I moved to the US, I didn't know that you are expected to tip for a haircut. I still don't see a meaningful difference between a hair stylist and any other employee that provides a service (e.g., cashier, barista). Yet, here we are.
First visit to the US, the second day my collegues and me were berated by the hotel breakfast staff (plural, they actually ganged up at our table) in Martha's Vineyard for not tipping.
This is the US, it's gonna be US-centric. But tax should be part of the price anyway for a physical store, cause there's no reason for it not to be. At least tip sorta has the point of being variable.
Disagree. Bait and switch is one symptom of the issue that the price is not what you'll pay. Which to be clear is awful.
And that matters if you have to be careful about spending. Also, "everyone knows about them", really? If it's so easy to "know" the local tax rate for various things, why isn't it easy to label them?
See the rest of the world, where even young kids can go shopping. If you give them 5 <amount of currency>, and the item they want is less than 5, or they want five of something that is 1, they can buy it.
Like I said, you can have a debate about how taxes are displayed on a price list. I respectfully disagree on solely including them in the price and making them "hidden". Calling them out is a good reminder of exactly how much you are paying for government services.
For example, the one common tax in the US that is hidden in the price is tax on gasoline. I think it would be better to specifically call this out, especially since gas taxes can vary so much by jurisdiction. I mean, pretty much all adults where I live know our sales tax rate is 8.25%, but I have actually no clue what my per-gallon tax on gas is.
Displaying THE PRICE on products is so amazingly basic that it's always mind blowing seeing Americans think this is a complicated question. It's not. If I have to pay 5 dollars at checkout THEN THE PRICE IS FIVE DOLLARS.
The store is just in a single town, it is trivial for them to fix their labels. For the user on the other hand it isn't trivial to figure out the tax rate for every store they visit as they travel since as you admit it changes everywhere.
For a big corp, they want to advertise nationally. "$1 hamburgers!" or "$799 refrigerator!". You can't make a national ad if you have to have precise pricing.
Not the strongest argument, but there it is.
A college friend worked at a pizza place that straddled a county line. One county had its own sales tax; the other did not. The register was in the back of the store to take advantage of this (the location of the register was considered the point of sale for tax purposes). Question: would it have been legal for them to advertise a price in the higher-tax-county part of the store that only applied if you bought the pizza from the outher county?
Local sales tax and national VAT are similar, but they don't work that much alike in practice.
> For a big corp, they want to advertise nationally. "$1 hamburgers!" or "$799 refrigerator!". You can't make a national ad if you have to have precise pricing.
If we zoom out of the “uniquely American issue” mindset for a second and look at how this is solved elsewhere, then it becomes clear that it doesn’t have to be an issue.
In this day and age plenty of multinational corporations advertise a euro price that applies for all the countries in Europe that carry the euro. This is a situation where companies have to account for varying VAT rates.
The solution? Companies take this into account w/r/t their margins when advertising a euro price that applies to all euro countries.
In the US however it’s even less of an issue.
I’ve noticed as a European that when you watch TV here in the US many ads are hyper localized, mentioning the closest local store.
If they can do that then they can list the price the item has at that store.
The real reason the full price including taxes isn’t used is because companies can make it look cheaper without hurting their margins, thus draw in more customers.
> Companies take this into account w/r/t their margins when advertising a euro price that applies to all euro countries.
Or they just recalculate the price based on you shipping info.
It would be rather absurd to expect companies to just “account” for an up to 7% difference in tax rates between different countries.
> TV here in the US many ads are hyper localized
While there are many local channels in some states the tax rate might even differ between counties or towns.
> The real reason the full price including taxes isn’t used is because companies can make it look cheaper without hurting their margins, thus draw in more customers.
Conjecture. Also you’re assuming that most people are incapable of doing basic math.
It’s not that. If you have to always show the full price any ads which include it become pretty much illegal (besides physical billboards etc.) unless you can somehow figure out where the person viewing it lives (not an option for TV).
While I wouldn’t mind if most ads just disappeared I don’t see how effectively banning businesses from advertising their prices would benefit the consumers.
Even if by law the post-tax price is shown, is there any law preventing showing the pre-tax price also? Surely not.
Seems to me giving people a shock at the checkout is a particularly evil way of making taxes explicit. It isn't like the taxes aren't broken down on EU receipts for those who care; in fact it's quite explicit.
> is there any law preventing showing the pre-tax price also?
In the EU the receipt must show what amount of the price was VAT.
This is so that companies can deduct the VAT in taxation (basically only the final consumer of the product/service pays VAT. Everyone else in the chain can deduct it in taxation)
> if it's so easy to "know" the local tax rate for various things, why isn't it easy to label them?
We know them generally enough to get by. That doesn’t mean calculating them precisely is a peach.
There have been stores that tried to differentiate on the basis of all-in pricing. It fails. Unless you’re paying cash or precisely monitoring spending, it doesn’t matter. (There is also a transparency argument in knowing how much is going to the business versus state.)
In summary, it’s not an issue for most Americans. (When I travel in Europe, having all-in prices doesn’t even remotely occur as a perk.) And there are ideological reasons that resonate with many Americans that are against it. Nobody to fight for it, a vocal minority against; seems like a silly hill to die on.
> See the rest of the world, where even young kids can go shopping. If you give them 5 <amount of currency>, and the item they want is less than 5, or they want five of something that is 1, they can buy it.
In the US even young kids can go shopping too. If you give them $5 + <tax on $5>. They can then buy any item whose price tag says $5 or less or 5 of any $1 item.
Tax rates vary based on the type of good. Give a kid $5 and send them to the grocery store and you have to anticipate if they’ll buy candy or an apple or soap or a magazine.
The only advantage to not including taxes is that people spend more money. This is marginally better for stores and worse for everyone else.
Theres no genuine benefit to society for not including taxes in the posted price.
I learned, from HN actually, that the reason for this is actually because taxes must be included and enumerated so that the public know the rate and thus can be cognizant of taxes levied against them. Probably goes back to the founding of America being a country that started in large part out of a rebellion against taxes.
While at this point it makes more sense to come up with a new law/methodology, I understand the thought process. If an item is $5 final price you don't know how much the tax actually was. The taxes can be raised easily and only those paying close attention to local or state politics would know. It's a backstop against government greed.
Again, I think we could reform this tax code and tip culture. However, I believe you legally have to include the tax. Maybe you simply should only be able to advertise the final price, but on the receipt it shows the tax rate.
All the more reason why everyone should be forced to do quarterly estimated taxes (like 1099 or non W2 workers do) instead of having the amount automatically withheld every paycheck by the payroll system.
Having the money 'in your hand' and then having to write a check for thousands of dollars feels much different. The guillotines would appear quickly.
That’s why it doesn’t happen, obviously. The entire roll out of the first federal income tax in WW2 was designed to be ‘invisible’ to your average American exactly because of the guillotine concern.
And it still widely works - queue all the folks happy about ‘getting their money from the gov’t’ in the form of their tax refund at the end of the year.
What's the tax on the individual items in question, also, because it's all variable based on what you're buying, what city you're in etc.
Pretty much everywhere else I've travelled in the world, the price on the shelf is the price you pay, even when tax changes based on what something is classified as (to whit that fun legal case of "is a jaffa cake a cake or a biscuit").
For some absolutely bizarre self-hating reason, the US has decided that, no, your experience should be "Oh wait, now I've got to go and add some seemingly random sales tax that I can't likely predict in advance, and won't know until I've rung everything up".
> What's the tax on the individual items in question, also, because it's all variable based on what you're buying, what city you're in etc.
You're overlooking the context. Someone said it was easy to let young children go shopping in places where taxes are included in the sticker price because you can give the kid $5 and the kid knows they can buy any item with a sticker price that does not exceed that or a combination of cheaper items whose sticker prices do not sum to more than 5$.
The implication was that this is harder for young children in the US, presumably because young children won't be able to do the complicated mathematical finagling that the rest of the world apparently thinks Americans do every time they go to the store.
My point is that in the US you just give the child $5 plus enough to cover tax, and then the child can use exactly the same approach those kids elsewhere use: if sum of sticker prices <= $5 they have enough money.
The whole point is that you want the shopping experience to be such that a child can predict how much they will pay at the counter, not so much that this particular scenario has to be considered and fulfilled.
This is on an article about a bill banning hidden fees
But when you see something that says 4.99$ when you ring up that item at the counter, you will not have enough to pay for your 5$ because of a fee which is not posted on the pricetag
You're trading ease of mentally calculating the total for the obfuscation of why items increased in price and really overselling the difficulty of calculating the tax. I can see why if you're traveling to the US that could be difficult (but if you estimate 10% your estimate will be over in most places and close enough everywhere else), because you'll probably be in many places you haven't been before (or often enough to retain the information). But if you live here, you learn the tax rate for the state and what goods it applies to and you're good to go.
I've lived in the states for 15 years now. I know roughly what to add, though I have to play guessing games depending on even the town that I'm shopping in, (quite literally I can even walk to two stores in neighbouring cities within range of my house, and pay different prices for the same goods).
It makes it no less absurd that I have to know and guess what the actual out of pocket expense is, no matter which way you slice it. Especially because it doesn't have to be this way. Given individual items aren't shown with their particular taxes on them, it obscures what I'm actually paying for what, until I've spent enough time shopping in whichever place I'm in to finally figure it out.
It's just one of many little ways that the US operates that's profoundly at odds with a positive experience for citizens. You _could_ have the prices right there in the stores. You _could_ structure your tax system such that the prices can actually be done that way and you don't get the rounding fun that you see mentioned elsewhere in this thread. However, because you do this "hide the actual price" there's zero incentive to actually implement tax approaches that are nicer as a citizen/consumer.
If you'll forgive a slight diversion, it's a similar deal with tax incentives. In a lot of countries around the world, they structure it such that the tax incentives happen at time of purchase, so e.g. a $2,500 rebate would result in you, as the buyer, buying at price $2,500 less than it would have been otherwise. You never see that $2,500 at all, you just see a much cheaper sticker price. It's end user focused, like you'd think a government for the citizens, by the citizens, would be.
The US approaches it such that you have to actually have the money spare up front, to eventually get it back (or mess about with your monthly withholding to try to claw it back that way, quicker). This penalises poorer citizens, who otherwise might have been able to afford to buy whatever thing it is that they could potentially afford. You essentially miss out on the tax incentives the government comes up with, unless you happen to be rich enough to afford a well versed tax accountant, or have enough luxury of time to sit there and work through all the possible rebates you might be eligible for. Neither of which poor or disadvantaged people tend to have.
With this being the way that tax incentives have long been done, there's no real incentive to try to do it any other way, even though it would be better for literally every citizen, rich and poor alike, with the possible exception of tax accountants. You'd all get specific rebates you were entitled for.
Or, hear me out, we could do the same as the rest of the world and post the final price on the item. There is no reason not to except the retail lobby is more powerful than a divided electorate.
I really like how tips are done in most of europe, where the tip is included by default in the restaurant price. So now your choices are - add additional tip if you’re really satisfied with your service, or retract the default tip if you’ve been wronged in some way.
Just by default you don’t have to think about it, and it shows up in all the places if should - government included.
I grew up in Germany and never heard about 'retracting' the default tip. The only way I can imagine this is severe complaining to the point where they take something off the bill which I've only ever seen once or twice, where as in the US this is a frequent thing.
> the tip is included by default in the restaurant price. So now your choices are - add additional tip if you’re really satisfied with your service, or retract the default tip if you’ve been wronged in some way.
What's the default tip, that is to say, what's the max you are allowed to retract? Is it the same everywhere or does the default vary by restaurant? I could see the appeal to laziness resulting in more consistent tipping, but also lower tips for exceptional/attractive/flirty waitstaff.
Ultimately, I'd much rather do away with tipping entirely. I grew up never questioning it until I spent some time in places where tipping just wasn't a thing, and I've resented it ever since.
Wages of workers is included, just like the other overheads are. If you want to give a gift to someone -- a tip -- how could that possibly be even known in advance.
A lot of restaurants in the UK will add a "service charge" which is supposed to be a suggested tip, and you can ask for it to be removed from the bill (and then tip separately, or not).
I think they mean retracting a “service charge” rather than trying to get away with paying 9 units for a 10 unit item. I’m sure you could have the service charge removed but the service would have to be awful for me to attempt it.
It’s not that hard. Europeans act like it’s impossible to calculate taxes in your head.
If the sales tax is 9.25%, round up to 10%, so $1 on every hundred.
I walk into a store and buy something for $7.32. Ok, I know in my head the tax is about $0.70, so cool, it’s be “about” $8.
That’s all I need to know. I don’t carry rolls of Pennie’s around so I’m not worried about the cents. He’ll, when was the last time you paid in cash?
It’s the same with Fahrenheit or miles. It’s a simple calculation, not a massive obstacle that holds Americans back from daily living or technological advances.
Your estimate is "about $8" but 7.32 + 0.70 is 8.02, which you can't pay for with $8.
Your example is actually a great illustration of why expecting people to calculate taxes in their head doesn't work. If you are trying to buy a product priced at $7.32, you can't easily tell whether $8 is enough. No one should have to multiply 9.25 by 7.32 in their head to know whether they can buy something.
Enough with this insanity. If the price is $8, then $8 should be enough!
You added a decimal - ceil($73.28 * 10%) = $8. I’m sure you knew that and just typed it wrong, but it does speak to how easy it is to make a mistake with simple math, especially for people unlikely to frequent HN.
Case in point, I asked for 1/3 lb of deli meat yesterday at the grocery store, and received 0.41 lbs. Worse, the worker was concerned that they hadn’t given me enough.
>If it's so easy to "know" the local tax rate for various things, why isn't it easy to label them?
Because you pay the tax from the total of your purchase and not from each item separately. E.g. in Santa Monica, CA sales tax is 10.25%, a price on a $4.95 item with tax included would be $5.46 but on 10x of these items it's just $54.58.
.... And this is why we don't just add it to the price? This is the grand reason?
Wouldn't it be far better to establish a rock solid precedent that the price there is the price you pay? Every exception that remains is an opportunity for weasels to justify why they are also the very important exception to the rule.
>And this is why we don't just add it to the price? This is the grand reason?
I don't think so, there are more apparent reasons listed in this thread already. I am just pointing that rolling a sales tax into price is not as simple as some imagine. I imagine VAT is accounted differently so it could be rolled into the price without this kind of error but I've never dealt with VAT so I can only speculate.
>Wouldn't it be far better to establish a rock solid precedent that the price there is the price you pay?
For whom? I don't see how it would be better for me but as somebody else noticed, the retailers are free to roll the tax into the price, the fact that they don't do this might be a pretty solid indication that it's not better?
> I don't think so, there are more apparent reasons listed in this thread already. I am just pointing that rolling a sales tax into price is not as simple as some imagine. I imagine VAT is accounted differently so it could be rolled into the price without this kind of error but I've never dealt with VAT so I can only speculate.
Nope. VAT has complicated rounding rules too. Turns out it actually is still easy to roll it into the price.
> as somebody else noticed, the retailers are free to roll the tax into the price, the fact that they don't do this might be a pretty solid indication that it's not better?
It's a lemon market. It's better for the customer if the actual price is displayed up front, but the customer has no way of knowing which shops are advertising real prices and which aren't.
You mean it's a market with information asymmetry? How so? Customers know both that the sales taxes exist and their magnitude. If you think it's a great idea you can put big sign saying on your shop/in your ad "inc. tax" instead of "plus tax", which is on most advertisements already. Surely customers could read it.
Why are sticker prices $24.99 instead of $25.00? Tricks the brain into thinking the price is lower. Same thing with additional tax at counter instead of sicker price.
> Customers know both that the sales taxes exist and their magnitude.
Customers have a sense that they exist and a vague idea of their magnitude, perhaps. They don't calculate them, at best they compare the advertised number - remember most customers are average intelligence or below.
Everyone has a phone that can manage calculations nowadays, few people can or want to calculate precise taxes. I still don't see how it makes advertising prices with taxes a "lemon market", which somehow prevents businesses from advertising such prices, if I understood your assertion correctly. Some businesses do advertise prices with tax, most don't. If people really wanted prices to include tax they'd naturally took their custom to the businesses that advertise "inc. tax" and took it away from "plus tax" ones, resulting in the situation opposite to what we have now.
It really should be the norm. The business collects the sales tax on behalf of the state and then submits the tax on the basis of their sales. There is no good reason they can’t price items appropriately and submit the same tax directly.
Retailers can charge whatever they’d like. Retailers are paying the tax, they’re just allowed to add it to the bill, but they don’t have to. They can calculate it per item, round up a penny and that’s the price.
I always find it weird that people (usually non-Americans) get so worked up about how US prices generally exclude taxes. I agree that it would be better and clearer if listed prices were tax-included. But they're usually not in the US. That's just how it is. Chill out, get over it, it's really not that big a deal.
This particular new law is not attempting to address that. Maybe it should. But maybe doing so would be biting off too much, and its sponsors believe it would never pass if they tried that.
The purpose of this law is much less ambitious, but that's fine. Incremental improvements are better than no improvements. I am pleased that now hotels can't spring daily "resort fees" on guests after they show up for their reservation. That sort of thing.
If you live in the United States, you know that a) listed prices rarely include tax, and b) for an annoyingly large number of things, you will be expected to add a tip. If you live here and don't know that, you are not particularly well-equipped to operate in the real world, and you should learn. If you don't live here but are visiting, it's unfortunate that you might not know about these quirks of American capitalism, but the law is not really aimed at you. Sorry, but our quality-of-life laws are tailored to people who live here first and foremost.
> If it's so easy to "know" the local tax rate for various things, why isn't it easy to label them?
It's not about being easy. It's about stupid psychological effects. If I list my price tax-inclusive, and my competitor lists theirs without the tax (but ultimately will charge the same price as I will), my competitor will get more business than I will. It's dumb, but that's human psychology for you.
> See the rest of the world, where even young kids can go shopping.
Young kids can shop here just as well. They just have an extra step to learn. They deal with it just fine; kids are smart and adaptable.
In Washington State, Gov Inslee imposed the equivalent of a $.50 per gallon tax on the oil companies. The oil companies raised the WA gas prices by $.50 per gallon. Inslee blamed the price rise on the greedy oil companies.
The taxes should be a separate line item on all purchases, so people can see what the taxes are.
I've seen tax breakdown signs for gas at some California gas stations (it might be all of them for all I know). I think it would help people figure out how much of the price is taxes and how much of it is something else.
I do also like how Costco breaks down the taxes on liquor, as far as I know those taxes existed before privatization of liquor sales in Washington, its just they were hidden in the "tax in" prices Washington State Liquor stores would post.
Sure but while we're at it, let's also break out things like wholesale costs, manufacturing marginal unit cost, per-unit profits, etc. Shed some light on what every layer is getting rather than being distracted by focusing on only a single one.
And of course none of this is incompatible with still printing one big-print all-inclusive price.
The taxes are on the companies, not the people. If the companies want to pass it along to the people while swimming in record profits, instead of paying with some of those record profits, as the people want and intend: then that is a choice they must consciously choose, and yes, doing so makes them greedy.
I mean, they have a lot of money and want more. That's greed. You can argue that you're personally okay with them being greedy, or even channel your inner Gordon Gekko and say that you personally think greed is good, but you can't argue it isn't greedy.
Displayed prices should be the price you have to pay - full stop. No math required or knowledge of local municipal/state/federal tax structures, no required knowledge of local cultural expectations around tipping. Just pay the price. Just because you're accustomed to tax/tip additions doesn't mean they are in any way a good thing that should be preserved.
Do I get a breakdown of what went into each item's price on the display sticker?
Because we get that now on most (if not all) grocery stores and retailers. I can see what items in my grocery receipt were charged which of the various local taxes and can dispute them. I've had groceries miss-categorized and considered prepared food which carries a local tax in my area, but they were not prepared foods and should not have been taxed.
Having a full price up front isn't the magical cure a lot of people paint it as.
You sure can have that. Why not, its just some extra lines printed out on the receipt. No one, certainly not I, are asking to do away with itemized receipts.
This happens a lot with apartment search engines. It used to just be a $10 trash fee or something but now they have gone so far as to add amenity fees. Good luck finding these fees on any website. So you go to view two different apartments listed at the same price online but one ends up having $50 in mandatory monthly fees and the other has $300.
Basically it should be illegal to not include any required monthly fee in an advertised price.
What isn't expected is the 3% fee for credit cards, the 2% for additional healthcare.
And yes they are on the menu, but they are hidden on at the end in fine print. I don't think that is correct.
Same goes for say renting a jet-ski. They advertise price X. I select the venue based on advertisement X, because it is cheaper than its neighbor. But the venue tacks on a mandatory $30 refilling fee that I cannot get rid of.
Or a hotel and their resort fees. The only reason it is separate is to show a lower price on the comparison sites.
If it's mandatory, it should be in the price, at least then I can compare.
And I believe that putting a 3% credit card surcharge should also be banned. If they put in a 3% cash discount, I'm fine with that. At least it allows me to compare prices.
I don't know why we can't just force everyone to show post tax/fees price upfront. It's complete bullshit that every restaurant bill comes with 3 different taxes.
Yes, it's on top of VAT. It's usually "discretionary", meaning you can ask to have it taken off the bill, but you must ask and it usually results in being glared at.
I'm in Ireland, I'd say a good third of printed on labels are not even in the right currency, as companies have a single UK and Ireland SKU. It's also understood that generally it's the retailer that sets pricing, not the manfucturer, so when a book has $9.99/£8.99 printed on it and a store sticker with €12.99, nobody is confused that that's not the exchange rates, or about which price they'll pay.
I'm also in CA and lived on Arizona for most of my teens and early 20s. Never saw this pricing. I would have remembered it, especially during the skint college years. It's always been a dollar. At best you'd see 2 for 1 deals.
It sounds like you live in a heavily subsidized market - probably best not to try to draw generalizations about inflation from your specific circumstances, they are atypical.
Taxes are set at a multiple levels (federal, state, district, and city) so it's pretty much impossible to show the post tax price on the label. Hidden fees are a completely different issue.
That argument about multiple level taxes is always beyond me. Taxes are not stock market which changes in unknown direction constantly, they are always known at the worst weeks before implementation.
In my eastern European country even biggest supermarkets can change all labels overnight (I even bet they can can do at least twice daily - albeit with here and there confusions when there multiple labels for same good)
And western European one have e-ink price tags. And one time there was wrong item on a tag. So I asked the person filling the shelf for help. He read the tag and item and behold in 5 minutes it updated itself to correct item and price...
It is not like these shops hop hourly between taxes...
It's not really a problem in brick and mortar stores. It's a problem in online stores because you can't necessarily give someone the right price with taxes until you have their address.
And this problem is harder than some might think. I knew someone who lived on a street that was a "dividing line" for this stuff: same zip code, same city, but one side had a 9% sales tax, the other side had around 7%. We tested a lot of online stores and none of them got it right. Including Amazon.
> How do they know how much tax to charge you when you buy?
Did you miss the part about it being calculated in the cart? That’s after you’ve made the decision to purchase, a decision which presumably included the price. I would refuse to give every vendor my address just to see a price.
>I would absolutely refuse to give every vendor my address just to see a price.
How does it work now? If you don't give your address, but the price depends on your address, how does the store know how much to charge you? If you don't have to give your ID then surely you just say you're from the lowest tax location?
> If you don't give your address, but the price depends on your address, how does the store know how much to charge you?
I don’t want to give my address to see the price. After I’ve decided to buy the thing, I’m okay disclosing who I am. But simply to see the price?
Also, if I’m a retailer and people are giving me their address before I price them, on what planet am I not going to use that to help me price discriminate?
Ha. Oh boy. I remember when an engineer at a POS system start-up said something similar. It's like when someone decides they're going to roll their own time zone calculation.
In case you're curious, yes, two people in the same city can be in different counties, different school districts, different water boards, et cetera. Each of those typically has taxing authority. And this is before we get into crap like urban enterprise zones [1].
Part of Valley Fair Mall in San Jose is actually in a different city (Santa Clara). Which I believe currently has a different minimum wage, and the stores in the rest of the mall don't price match it.
Also, Apple Park is in Cupertino the city but not the school district.
Believing mailing address cities actually corresponds to a unit of government is one thing I learned is incorrect when I moved to the LA area.
I live near a place called Westlake Village that straddles the LA County/Ventura County line. In LA County, Westlake Village is a city. In Ventura County, Westlake Village is a neighborhood within Thousand Oaks, and it has a different tax rate. But both mailing addresses use Westlake Village as the city.
Similarly, I have friends that live in Newbury Park, and that's what is on his mailing address. But Newbury Park is just a neighborhood within Thousand Oaks.
Most online stores immediately ask for your location (or know a good estimate via IP or ad tracking) anyways. Or ask you to "search for the nearest location." So there is already a lot of data they could use.
I've never seen an online store ask for my address before I'm in the checkout process. The only exception is when I check to see if an item is in-stock at my local store or if one-day shipping is available.
The location detectors are notoriously bad. I'm either placed in some town in Washington (multiple states from me) or somewhere else that does have different local tax than my part of my state.
It's also just not as concerning from a competition or perspective, since taxes apply to all competitors, and none of them have the freedom to set those rates.
Yeah, so in the US that doesn't work. Most obviously for display, tv, or radio ads you cannot ensure correct taxes in the advertisement (this was a big eye opener when I first moved to the US).
It also doesn't work for online sales, where the final price can depend on the final destination of the goods or service. e.g. the taxes cannot be displayed until you've been given a street level address.
For me for example even my zip code spans 3 different cities with different tax codes, my street is literally one block from a different city in one direction, and about 5 blocks to another. \o/
>Most obviously for display, tv, or radio ads you cannot ensure correct taxes in the advertisement.
They really shouldn't be advertising false claims in the first place.
>It also doesn't work for online sales, where the final price can depend on the final destination of the goods or service. e.g. the taxes cannot be displayed until you've been given a street level address.
That one has an easy solution: Just ask for the destination.
> They really shouldn't be advertising false claims in the first place.
Just to be clear, you're suggesting that all pricing be removed from all advertising nationwide. This would clearly be to the detriment of the consumer.
> That one has an easy solution: Just ask for the destination.
Again, this is to the customer's detriment. They have to provide their personal information just to see the price of any item on any website they visit? And that's somehow worse than having to mentally add a percentage to any price they see until checkout? You must be kidding.
Given the only practical alternative I can imagine would mean to never show a price... yes, the current state of things is more beneficial to the consumer. Again, seeing an pre-tax MSRP price in an ad is better than not having any MSRP in an ad at all.
If you have a practical alternative that could somehow allow for advertising with prices that include tax, I'd love to hear it. (Just to make sure we're on the same page ahead of time: amending the Constitution to strike the Tenth Amendment so that the Federal Government can prevent states from levying their own taxes is not "practical".)
there are in the region of 100 different in the SF Bay Area alone. I drive through at least 10 in my daily commute.
Localized advertising as you put it, with included tax info, cannot work for: TV, radio, billboards, internet advertising, and is not useful to consumers for seat advertising, bus stops, etc.
Circulars only work because they can be printed in large numbers and delivered cheaply because they are delivered to every house in a region. Except delivery regions are by zip code, not by city or municipality - my zip code has three cities in it. As I have said elsewhere I am around 10 houses from a different city, so postal delivery for circulars that includes the prices is out unless you include multiple prices, but that's still kind of busted because if I get a circular I might stop at the store in a different city along my commute.
So now if I see a "full price" from X different ads, which "full price" is correct for where I would be shopping? Hence what matters in this environment is that all advertisers are providing a complete price where the only difference is the tax.
Wait, are you saying that false advertising should be allowed because it makes junk mail cheaper to produce?
If the tax people were paying was transparent it would help people to comparison shop where they paid lower prices. I really see it as win-win.
And even if there was a carve-out for non-location-specific advertising, at a bare minimum brick and mortar stores (and restaurants) should display the prices they actually expect you to pay.
> They really shouldn't be advertising false claims in the first place.
They aren't false advertising, they say "$X + tax and fees", this law is about removing the "and fees" bs where the seller is actually charging more than the advertised price but pretending it's a nebulous fee they didn't set.
I also think you may not be understand the degree of BS. My partner and I were recently buying a new car, and not one car dealership was advertising a true price for their cars. Multiple dealers had something that they literally stated was a "market price adjustment fee", that was not given until you were in the process of purchasing the car. These "fees" were 5-10 thousand dollars on a 30k car.
> That one has an easy solution: just ask for the destination.
So you would be ok if the first step in shopping online is giving the site your street address? you're saying that you could not price compare online without first providing your address to every company you were looking at.
I'm assuming you aren't in the US, so you aren't familiar with how its governance works. Every state, county, and incorporated city can have its own sales and service taxes. It doesn't matter if you think that's a questionable setup - the US constitution guarantees that right at at least the state level, and most states have similar laws guaranteeing some amount of that power to county and city governments, so it is literally impossible to remove this structure. So this issue is how do you make this law work, given the constraints of how the US government is constructed. "Solutions" that require any kind of unification of governance are almost certainly unconstitutional (again this separation of governance is a part of the US bill of rights).
AFAIK (I'm American), the UK has a VAT rate for any good a consumer might find in a shop: 20%, 5%, and 0%, depending on product type. Because this rate is country-wide, the manufacturer can include VAT in their RRP. For example, if I go to the Sony website, a PS5 is £479.99 incl. VAT. If I go to the Amazon UK site, it's £466, or 3% off, incl. VAT.
If we locate the same product on the Amazon US site, it's $499.99 before tax. Amazon has two choices: show their price before tax or require shipping information from the user to see a price at all. (An estimated geolocation is not precise enough to determine a price.) For most consumers, I suspect seeing a pre-tax price upfront is better than having to provide personal information to see a price at all.
That explains online sales, but let's address brick and mortar retail. Imagine you go to Best Buy to comparison shop against Amazon and the price says $550 including tax. Is tax on this item in this location 10%? Or is it 5% but Best Buy's base price is higher than MSRP? It's up to me to find out the local tax rate and do the math. Let's say they agree to price-match Amazon; the clerk will need a function on the register to input a pre-tax price to facilitate this.
So, given this complexity and disparity, US manufacturers list MSRP without tax. Retailers display pre-tax prices for marketing and competitive reasons, generally never exceeding MSRP. Customers have come to expect this nationwide, so changing now would be challenging. (There are other good reasons to stick with pre-tax, too. In grocery stores, for example, pre-tax prices are very useful for SNAP beneficiaries.)
Do I think it would be useful to display tax calculations on signage in-store? Absolutely, and for some goods in some states, they do. But without laws or customer demand, retailers have no incentive to put themselves at a competitive disadvantage.
1. Taxes can change quickly, and it's a pain in the ass to keep up with. If you're now needing to deal with changing the printed price on tens, hundreds, thousands of items - I can't even imagine.
2. Online sales you won't even be able to calculate it until the customer puts in their shipping information. And no, they can't figure that out beforehand as there are a myriad of reasons why where their IP is does not mean where it's being shipped to, which is where the taxes need to be calculated.
I'm curious, do books have prices printed on them in the UK? Here in the US, the suggested retail price (pre-tax, obviously) is generally printed by the manufacturer on the back or inside the dust cover of every book.
Gotcha. In the US, if you tried to keep that system, you’d need a different printed MSRP per tax nexus and books in warehouses would no longer be fungible.
Almost every other country in the world has solved this problem.
It’s always fascinating when Americans have problems other countries don’t have, and just throw their hands in air saying “welp nothing we can do about it”
One group always pushes the "nothing can be done" narrative because they've been making money hand over fist because of the way things are now and they don't want the status quo to change. Another group who jumps straight to "nothing can be done" have been conned by the first group into thinking that any deviation from the status quo is a trick by the devil to somehow take their freedom/property. Add in an unhealthy dose of American Exceptionalism and irrational fears of other countries and it means that there will always be somebody unwilling to consider adopting a good example set by people with a different flag or a funny accent. The rest of us are more frustrated than fascinated by the whole thing.
That's because other countries aren't as aggressive about pushing governance down to a local level.
For example: in most countries you include sales tax in your advertisement, because why wouldn't you? In the US there is no countrywide sales tax, there are some states with literally no sales tax, and then there are states with high sales tax to compensate for zero income tax (which is excitingly regressive taxation).
Then inside the states each county can have its own array of sales and service taxes, which can also vary according to the goods and services involved, and finally individual cities in those counties can also have their own.
Core to this is that the US constitution explicitly enshrines federalism in the tenth amendment (the last part of the "bill of rights"), that explicitly limits the power of the federal government.
> Core to this is that the US constitution explicitly enshrines federalism in the tenth amendment (the last part of the "bill of rights"), that explicitly limits the power of the federal government.
I think this is the part that non-Americans fail to understand; we have no central tax authority and that principle is enshrined in our Constitution. Like it or not, so long as the US exists in its current form, so too does our wildly disparate tax code.
The price on labels in a store is an absolutely negligible part of the problem. By the time you're looking at prices in the store you've already chosen that store, presumably on the basis of the advertisements.
So the problem is that your rule impacts the prices everywhere that you see a price: any price you see online, in a poster, in a magazine, in a newspaper, in a mailer, on tv, or hear over the radio cannot include the correct taxes for where you pay for or receive the product/service.
The only place that can have the correct price is an in brick and mortar shop at the final point of sale, and even then some prices can be impacted by things like whether you're a retiree, disabled, veteran, etc. The lack of tax in the price is annoying but is predictable and is consistent. Failing to include the relevant taxes does not impact the relative cost of anything on the shelf. If you choose product A because it's the cheapest, it will still be cheapest once tax is applied. The problem addressed by this bill is when product A is the cheapest on the shelf, but has a secret fee that no other product has, that you don't find out about until checkout.
Legislation that said "you must include the final paid price in any price" in the US literally means "you cannot advertise a price for the product".
To be clear, if you go to an online store, then your rule means none of the listings can include any price information until you provide the final delivery address. Good luck comparing prices.
Hence the law says "your advertised/stated/sticker price must be the full price including any 'fees' and similar that are not set by a government agency".
That is it fixes the only thing that it is possible to fix: prices online including "fees" that are really just part of the price. In addition to being odious and anti-competitive I would also argue that those "fees" are attempted tax evasion to create a fake price for sales, and similar taxes.
Would I like the listed price to be the actual real price being charged? of course, the only people who disagree are also the ones abusing the "fee" BS that this law bans. But any law that attempted to do that by mandating inclusion of taxes in prices would instantly mean that advertisements in the US (I guess technically just CA in this case) would be unable to include any price information.
So is it annoying that when I see prices in advertisements I have to remember to add some % to the price? of course. Is being unable to fix that a reason we should also have to allow retailers to add completely arbitrary and fake "fees" that are a mandatory part of the price that the retailer (or whatever) has complete control over?
I would say the argument is no, we should not allow that, and that's what this law bans.
It sounds like you're saying that because we can't fix the pricing to include taxes everywhere, we shouldn't stop companies from having fake fees?
> Hence the law says "your advertised/stated/sticker price must be the full price less taxes".
And that is bullshit. In India every manufacturer is mandated to specify MSRPs that are inclusive of all applicable taxes everywhere. The US can have the same thing too, and remove all complexity altogether so that each item will have a uniform benchmark price against which different stores and retailers can show discounts on.
And by the way, India's taxation is much, much more arbitrary and toxic than US taxation, and has a similar kind of structure with various local taxes piling up on federal taxes. Companies still make it work.
Looking at https://en.wikipedia.org/wiki/Taxation_in_India, India has a fixed set of GST rates and classes. It does not look like each city can have its own additional GST. The only "local" tax I can find is property taxes, and the US has those too. But we're talking about property tax, we're not talking about interstate taxes (which are illegal under the US constitution), we're talking about what you or I (I'm originally from NZ) would call GST, or the UK would call VAT (the UK adds so much value :D).
The whole point is that there is no set sales tax that is present everywhere.
I will try to make this clear, step by step.
In the US, the federal government does not, and can not, set any kind of federal sales tax, service tax, or similar.
Every state is free to set its own sales and service taxes. The states have set sales taxes from 0% to 7.25%.
In each state, each county can also set their own additional sales taxes.
In each county, each city can also set their own additional sales taxes.
So that total combined tax for any given location in the US can range from 0% (in four states) to 13.5%.
That 13.5% number? That's in Alabama where the state sales tax is only 4% and the average sales tax (state + county + city) is less than 9%. That's just one state.
The 7.25% sales is California, where total sales tax varies from 7.25% to 10.5% (the 10.5% is only in one city).
For a product in the US to include an MSRP that included all taxes it would have to include hundreds, if not thousands, of prices and the cities, counties, or zip codes that those apply to.
This is before you get to those taxes changing regularly.
When we are talking about the insane numbers of tax rates in the US here, we are talking about GST.
When we talk about cities that set their own tax rate, this isn't some population driven thing, its a specific legal entity.
To try and reinforce this, let's consider just the San Francisco Bay Area in California. In this region there are 101 municipalities, each of which can have their own additional sales tax rates, on top of the sales tax rates from nine counties. The population of these municipalities range from 1500 people to a bit over 1 million. For the bulk of these there is literally no space between the cities. Take my house, it's in Oakland, but if I walk past one house on the corner, and then about 10 houses west the houses are no longer in Oakland, they're in Emeryville, which can have it's own sales tax.
Just in my commute to/from work I drive through I think 10 different sales tax rates. This is ignoring any special sales tax rates: some but not all cities have different tax rates for soda, cigarettes, etc.
And understand this cannot be changed, any law that tried to change this would fall to the CA constitution (which limits state government control of local governments), and any thing that tried to remove this control from the states fails due to the US bill of rights (the part of the constitution that also guarantees freedom of religion, guns (sigh), etc). This restriction on the control higher level government has on lower level/state/local governments is fundamental to the construction of US government.
OK.. seems I was under a major misconception about how US taxation operates, I naively assumed it was similar to other countries' federal+state structures.
No worries, when it comes to governance in the US just assume the most absurd possible outcome of what seemed like a great idea 250 years ago in a country of 2.5 million people in 13 states, and less than 100 towns we would consider cities today, applied to a country of 220 million people in 50 states and 19000+ cities \o/
What do you mean "impossible" If waiter or cashier calculates final price when you pay, it must be possible to calculate it upfront. Im not aware of situations where final price would depend on the purchaser. That would be discrimination.
The good thing is that prices (in stores) are set in the store. The labels are most likely little e-ink displays. There's absolutely no reason to not show the final price there aside from wanting the advertised price to be lower than it actually is.
The same chocolate might have a different price depending on the store I go to as well and that doesn't seem to be a problem at all.
That only makes sense for an online store that's going to ship you something, in which case asking for the destination ZIP code up front solves that problem.
For brick-and-mortar stores, the store can quite easily calculate the final price of an item on its own. Sales taxes do change on occasion, but likely less often than the pricing of the items themselves do, so there's no added burden in having to update them due to tax changes.
> That only makes sense for an online store that's going to ship you something, in which case asking for the destination ZIP code up front solves that problem
Tax boundaries do not follow zip code boundaries.
To actually find the right tax rate you need the full address, including suite or apartment number because there are cases where a tax boundary runs between different suites at the same street address.
Also this is not just for online stores that ship something. It also applies if you are selling a downloadable good like a game or music, or selling memberships to your site.
FYI, ZIP code is not enough to calculate tax rate. You need city and county. 9,000 ZIP codes cross county borders.
Currently, consumers can generally tell if they are getting a reasonable price by comparing the MSRP they see in an ad against the price they see in store. For example, if the nationally advertised price of an Xbox is $500 and Best Buy has it for $500, I know I'm not being swindled.
But if the in-store price is $550? I guess I have to haul out my calculator and ask for the store's tax rate so I can determine whether or not Best Buy is ripping me off and I should take my business elsewhere.
Ideally, they'd show pre-tax price, tax rate, and calculated total price on every tag. Maybe, one day, we'll see action on this in a state or two, but I don't suspect it is high on the lists of any lawmakers.
And yet the register magically knows how much tax to add for each and every item you buy. I could maybe agree with your argument if taxes changed often, but they don't, and it's very much possible to calculate them beforehand and display full price.
I disagree. Note the California bill specifically exempts taxes from this "upfront pricing" requirement.
The reason I think listing taxes separately is OK is because (a) it is not something that the business itself has any choice over, and (b) all businesses have to tax the same for equivalent services. I think listing the taxes separately serves an important purpose to remind the purchaser about where your payments are actually going. If you don't like the fact that you have to pay 3 different taxes, well, if enough other people agree with you, you can change that.
I'd be OK with listing taxes up front (but I will say that restaurants I've been to always highlight any mandatory fees besides normal sales tax on the menu) but I'm absolutely in favor of breaking out the cost of government services on the bill.
but I will say that restaurants I've been to always highlight any mandatory fees besides normal sales tax on the menu
In San Francisco, restaurants rarely highlight the fees. They are usually in smaller font at the bottom of the menu (and maybe only on one side of a double-sided menu) and sometimes not discoverable until you get the bill.
Tartine hides the 5% surcharge at the bottom of the menu in smaller font. It's also one of three bullets: the first and third are about food safety.
What's the rationale for putting the surcharge bullet in between the two food safety bullets?
Also: if you order online from Tartine, you won't see the surcharge until you go to check out. And if you order from one of the handwritten 'daily specials' signs, you won't see the surcharge until you pay.
Perhaps "highlight" was the wrong word choice, but it is specifically called out on that menu example. I didn't read the full bill but I'm assuming since the required charge is fully visible, this restaurant would be fine (of course, as long as that required charge was also shown in any advertising that included prices).
FWIW, I think those kinds of "5% employee surcharge" fees are total bullshit and should be included in the price. The only reason "fees" should ever be pulled out separately are if they're optional, variable, or depend on something besides the unit cost on the product.
I didn't read the full bill but I'm assuming since the required charge is fully visible, this restaurant would be fine
That's not my understanding. Charging a random fee that's not disclosed to the customer before they order is already illegal. The new law goes further: any random fees should be rolled into the advertised prices.
> The reason I think listing taxes separately is OK is because (a) it is not something that the business itself has any choice over and (b) all businesses have to tax the same for equivalent services.
(a) is really just like the price of basically all of utilities, and all the indirect taxes paid on salaries... the only difference is that they are not directly calculated on turnover. Should we also break that out?
(b) is actually an argument in favour of integrating the taxes in the prices : there's no difference between businesses, thus no need to bother the consumers with it -- in the end, they will pay something that includes the taxes, wherever they go.
> I'd be OK with listing taxes up front (but I will say that restaurants I've been to always highlight any mandatory fees besides normal sales tax on the menu) but I'm absolutely in favor of breaking out the cost of government services on the bill.
You mean like basically everywhere in the world where your receipt does show "of which VAT rate A% : X, rate B% : Y, Special Tax: Z" ?
Sales taxes are good because tourists pay them. Most people mad about taxes hate property taxes, because they want to move all the tax burden to tourists (and their own children.)
From the article linked in the first paragraph: "The legislation — the first bill of its type across the state — would prohibit advertising a price for a good or service that does not include all required charges other than taxes and fees imposed by a government.
Why are taxes and govt fees exempt? This reeks of "rules for thee but not for me." Either to goal is to avoid misleading customers with low advertised prices, or it's not. For example, California has a ~50 cents/gallon fuel tax. Can gas stations start advertising prices that are 50 cents lower than they actually charge and be compliant with this law?
A classic example in the US is sales tax. Those are taxes determined by the final sale price which can vary depending on state, county, or city. More importantly because those fees aren't controlled by the company doing the bait and switch it's the same for every company.
This bill is very clear that the target is "prices" that reject parts of the price that are entirely set by the person selling the goods or services. e.g. Ticketmaster, etc's entirely bogus "service" charges, or airbnb's that say $x/night but have a $500 cleaning "fee".
I hear you, but the press release explicitly said that the goal of the bill is to prevent companies from attracting customers with a misleadingly low price and then charging a higher price. How are government fees and taxes -- especially industry-specific government fees that consumers may not be aware of -- not the exact thing that this bill stands against?
If anything, this just encourages lobbying and corruption. If you have a restaurant, you can't just covertly charge a 5% worker benefit fee. But you could if you're part of a restaurant lobby that turns that 5% worker benefit fee into a 5% restaurant tax that benefits restaurant workers!
Independent of the bill's goal, I also think that seeing all govt fees and taxes upfront might be a useful exercise in California and elsewhere. When fees are hidden, people forget about them and don't evaluate them. But if they are front and center, then that would hopefully make politicians more accountable. For example, the California train project has spent something like $10b so far and there's nothing to really show for it. And that money came from somewhere, but it's easy to forget about that if you're not reminded constantly. But if every driver in California paid $1 extra on every gas bill for the last 20 years for a "train tax" that was on the receipt, then maybe people would hold their government more accountable. (This is an apolitical comment: caring more can mean cancelling the train project, or funding it 3x more. Whatever constituents think is best.)
Because government taxes and fees are a constant rate (given a particular good and location, anyway).
If I'm price-comparing hotels, and I see one that's $100/night, and another that's $75/night, I know that the cost may be higher due to taxes, but it will be higher by the exact same percentage for both of the hotels.
But if I go and book a room at the $75/night hotel, show up, and find that they're hitting me with a surprise $50/day "resort fee", then I'm going to feel cheated, and wish that'd I'd booked at the $100/night hotel (assuming that one doesn't have a resort fee, anyway).
The deceptive hotel tried (and succeeded!) in attracting me with a misleadingly low price, when I would have been able to get a better price from a different, non-deceptive hotel. Taxes really have nothing to do with that; people aware of how things are usually done in the US will know that no business would list taxes included unless they were required to, as doing so (when others do not) is essentially a competitive disadvantage.
I do agree with you that a better new law would require businesses to include taxes in their prices. But that's frankly so far outside the norm in the US that I wouldn't be surprised if the bill's author(s) expected it would fail to pass with that kind of language in it, so they limited it to something they actually thought would pass. Baby steps! Incremental improvements are better than nothing.
Also consider that there are many weird people in the US who like having sales taxes added later and itemized out, due to some misguided belief that including taxes up front would let the government raise taxes without anyone knowing. This is related to the unfortunate phenomenon of the IRS not being allowed to essentially do our income taxes for us.
> If I'm price-comparing hotels, and I see one that's $100/night, and another that's $75/night, I know that the cost may be higher due to taxes, but it will be higher by the exact same percentage for both of the hotels.
1) IMHO this doesn't help. If I don't know what the taxes are, then knowing that they will be similarly high on either transaction doesn't help me with budgeting. Just like it's hard to know if a $75/night hotel is within my budget without knowing the size of its resort fee, it's also hard to know if it's within my budget without knowing if the tax on it is 8% or 18%.
2) FWIW this varies by county, so it's easy to have two hotels that are a mile apart but with different tax rates. To pick a random state, here is an old table of hotel taxes in Florida by county: https://www.floridasalestax.com/florida-tax-law-blog/2015/ja.... These taxes vary from 7% to 13%, so if you're picking hotels next to a county border, the difference can be noticeable.
If you're comparing prices currently you see two prices advertised:
Company A: $100
Company B: $140
Company C: $150
Company D: $155
Currently, when you go to buy from any of these companies they all add the hypothetical 10% taxes you would be required to pay, but company A also adds $60 in "service fees", Company B adds $20, Company C adds $10, and company D becomes the cheapest.
If you remove the bullshit fees the advertised prices are falsely excluding then the advertised prices give you the actual real relative position.
Hence there is value in this law, even if it doesn't force the taxes to be included.
Now your example of hotels is a worthwhile extension to this, where you could say "if the location of the purchase or service is fixed, the listed price must include all applicable taxes", but there's a clear benefit to banning the BS "fees".
This is ignoring the whole tax avoidance/evasion I believe these "fees" are also being used for.
Taxes and government fees are exempt because it promotes transparency!
I wish gas stations showed taxes separately, but I'm guessing retail gas stations aren't the ones collecting and remitting those taxes. It's probably taken earlier in the supply chain.
It doesn't promote transparency. It means you still don't know how much something is going to cost by looking at the listed price of that thing. That's the opposite of transparency.
Including taxes and fees in the advertised price won't prevent stores (or anyone else) from making it clear what percentage of that price comes from taxes and government fees. I'd love to see more stores provide an itemized breakdown of those fees so that we can see how much of the price to blame on greedy vendors vs sneaky governments.
What I want most of all though is to only ever pay what the listed price of an item is. I want to be able to walk in with a single $5 bill and pay for something that says it costs $5 and have that be the end of it. It should really just be that simple. Other countries do it. We can too.
It would require a massive overhaul of the tax code in every state, not to mention that it would require state-by-state coordination because Congress cannot force them to comply. Other countries do it because their constitution generally does not include a clause like the Tenth Amendment.
But wow, the things it would do to national marketing. Imagine an iPhone launch. Tim Cook gets to the pricing slide and it says, "Starting at $1099 in Alaska, Delaware, Montana, New Hampshire, and Oregon. Check your local store for your pricing in your location." That's our cue to mentally add our local tax rate like we do already, now with the added benefit of feeling bad about where we live.
That might be a good thing! If the announcement said that it cost extra in some state, maybe residents of that state would apply more pressure to do something about it.
It doesn’t “cost extra”, it has a different tax structure. Sure, there might be no sales tax in OR, but there sure is income tax. Just north in WA, it’s the opposite where there is sales tax but no income tax.
Looks like Ticketmaster, AT&T, Comcast Xfinity, Hotels with mandatory "resort fees", airlines, banks, car dealerships and rental agencies, realtors, landlords, etc. may have to make some changes.
Deceptive pricing is extremely annoying, as are stealth price increases.
I’d like to see IATA set some standards for airfares that mean you can easily search like-for-like knowing you’ll want to be able to choose your seat and have a bag. Google Flights do an OK but not perfect job at this
> Hidden fees are fees in which a seller uses an artificially low headline price to attract a customer and usually either discloses additional required fees in smaller print, or reveals additional unavoidable charges later in the buying process.
There's a restaurant I've given up on for one of those fees. It's not on their PDF menus at all, nor the HTML ones. Just a nice little surprise when you go there. Fuck you. Pay your employees out of my bill, or go out of business, but don't tell me I owe 4% more for "kitchen support".
Much like restaurants that want to charge the customer for credit-card fees. Oh, you want to do that? I'll show you why restaurants were among the first to adopt credit payments even with merchant fees: because when you pay cash, some employees steal. And they steal a lot.
The card costs them money to process, so they tack on approximately that amount. And you can opt out by paying cash. Seems fair, though maybe the card price should be default.
Cash is also preferred in food service, because it's easier to cheat on taxes. When you're paid a tip in cash, with no paper trail of what that amount was, the reported earnings on the tax form is merely a suggestion to tell the truth.
My favorite local restaurant has a 3% card surcharge and a 10% cash discount, so like, 14.4% card surcharge. Yeah, probably for tax reasons. (This isn't why they're my favorite, their food is just really good.)
Cash costs money to process, too. I want the manager to have to run to the bank several times a day to get fresh change and deposit cash, tearing out their hair from frustration, for imposing such an annoying requirement.
The hidden fee that I hope this deals with is the mandatory "resort fee" that is showing up more and more frequently on hotel bills. You find an online room rate for $120, go to book it, and it is $120 + $50 resort fee + taxes, and it ends up being > $200.
Expected tips are known up front, they are variable, and I certainly think it's totally fine to not tip in places where it's not usually expected, "flipping around the iPad" be damned.
It's not true that tips are known up front. E.g. when you're travelling, you don't know. And taxes are (can be) also known up front. But that's the point - avoid the guesswork and let me know what you expect me to pay.
Tips are completely discretionary. You are always free to tip zero. That may make you an asshole depending on local customs but I’m not aware of any place on earth where not leaving a tip will get you in legal trouble. Not paying a last minute hidden fee might.
Yes, I understand. But if you want to come to the same restaurant again and you don't tip, it may be a problem. Imagine Amazon not wanting to do business with you because you didn't add extra X% to your previous purchase.
This is a good point. When I go to a coffee shop and order a latte I am buying a latte and the appreciation of the person that makes it. If they think I’m a dick it renders my coffee undrinkable and the comfort in knowing that I’m liked should be free.
See, that's the problem, people are worried that if they don't tip that employee is going to do something to their food. That's absolutely disgusting. Maybe I should piss on the dollar before I give it to them?
The thrill of dining at places with suspect food safety is hard to match! We should ask the government to step in and ban the thing that is in my mind keeping everyone from pissing in my soup so that we can all share in the rush of severe food anxiety.
We could learn from for example Japan where there is no cents and all fees included so 5000 Yen is 5000 yen no tip no tax no fees no cents it's really cortisol reducing.
Aside from the cents bit, it's like that in Australia too. If something (retail) says $30 then it's $30. If it says $30.95 then it's $30.95. It's very simple. When you're selling wholesale it's different because it's a sales tax, and that's paid by the consumer, not the retail business.
Sales tax is charged only once for a retail good, not for the sales of wholesale goods that led to the retail sale. Otherwise the store that sold you a thing would itself have also had to pay 10% on that thing, as would the factory that bought the raw materials to make the thing, etc.
Tax is not always included in Japan in the shown price①. For example, the 100 yen stores the tax is separate so I know if I pick up five items I am paying 550 yen.(10% sales tax nationwide for almost everything.)
①However, by law the price tag is required to also show the with tax（税込） price if displaying the without tax price.
1 US cent = ~1.5 JPY. Putting the decimal point a couple digits over doesn't really change anything. If you really want to, you can tell people that you spent "100 cents" instead of "1 dollar". They'll probably look at you funny, though.
I'd be perfectly willing to tell people that I spent 100 cents as long as it meant that every time the listed price said 100 cents I could just pay with a single dollar. That'd be a huge change from what we have now, where the price says $0.97 and the cashier demands $1.06
Yes but Japan also has hidden fees sometimes. Like in certain restaurants they serve you an appetizer that you dont ask for and charge you for it before the real order comes.
That happened briefly for a couple of years, then it was made illegal, because we have governments that actually care about making things better for their people.
I hate to be the bearer of bad news, but people in countries where sales tax is included in the price (which is virtually every other country in the world), are well aware of sales tax.
Many countries also exempt sales tax from essential groceries, which is not true for all US states. So the idea that the US model is somehow good for lower-income consumers is laughable.
I have no desire to learn what the tax rate is for X in any state at all (since I cannot vote to change it in any case), what I am interested in day-to-day is the all-in price of whatever I’m about to buy.
Eliminating junk fees (looking at you, AT&T) is a net win for reducing cognitive load. The idea I should have to learn the tax rates of the multiple jurisdictions I may or may not be in just to serve your political views is fucking asinine.
> Including taxes in the sticker price is bad. It allows the government to quietly increase taxes without people noticing.
Oh please. When taxes go up, people notice. In California, new taxes have to be approved directly by voters, even. If you choose not to be civically engaged enough to notice new taxes, that's your problem.
This is the same dumb argument people use for not allowing the IRS to send us a pre-filled tax return. Instead, we flush billions of dollars a year down the toilet on tax prep.
Whilst encouraging, I also feel like US policies are part of the problem, besides allowing it for so long. The fact that sales tax in the US doesn't just depend on state, but can be down to the house number on a street, means it's difficult to present automated listing of all fees online. There are reasons why sales taxes are not included in price tags in shops. Among them, that the tax could be different if you went across the street, and you don't want to advertise that. (There are numerous other policies contributing to hidden fees, like minimum wage laws leading to tipping.)
Yes, it would include that kind of thing. It’s written broadly to include all fees except (1) taxes and government-mandated fees, and (2) shipping fees (which have to match the actual cost the seller pays for shipping).
Yeah, we should make this national policy but make it include tax and government mandated fees too. I don't mind listed prices not including shipping fees because that requires knowing where I want something shipped to and how. As long as that's clearly disclosed before I pass the point of no return in a transaction, shipping fees aren't such a big deal.
It has to do more with e.g. ISPs charging fees that are not revealed to prospective customers (either in their website or other marketing materials) yet appear in a monthly statement and significantly increase the real cost of their service.
Make sure to go to your cart and add ProtectMyOrder, *If shipping protection is not
present in your order, ameriDroid is not liable for lost, damaged, or stolen items.
"Shipping Protection" is a US$1.99 extra fee, which is turned on by default. Pretty clearly a complete scam approach.
As nice as that would be, I think they probably thought including that in the bill would greatly increase the risk of it failing to pass. What we've gotten here is an improvement, even if it could be better.
A working market depends on many things, including price transparency. If people don't know how much they are paying for a service of unknown quality, they can't compare products and services.
Hidden fees are one way to prevent price transparency, but they are not the only one.
It may seem strange, but a working free market needs strong guidance. Laissez-faire capitalism will lead to broken markets with loss of freedom. There are too many ways to impede market competition. Here is a list of some, without claiming to be complete:
- Monopolies and oligopolies
- Cartels and collusion
- Confusion marketing (confusopoly)
- Hidden fees
- External costs
Especially external costs are insidious. This means that a company does not pay for everything it uses. For example, if a company lets it rip and pollutes a river instead of having its wastewater processed, it transfers the cost of pollution to everyone else.
When I was younger, I believed that capitalism would solve everything because of the invisible hand, a concept introduced by Adam Smith. The invisible hand is the idea that even if everyone egoistically optimizes their own benefits, there will be a natural collaboration that will achieve progress.
Today I know that this can work with a lot of strong guidance. One example: California has banned hidden fees.
I wonder how this will affect the rest of the US even if congress can’t pass something. For example, if I’m in California and I buy something elsewhere am I protected? If I live in Oregon and buy something in California am I covered?
The most obvious assumption that comes to my mind is that if you're a Californian visiting the rest of the US, you're not covered in local businesses. If you're from the rest of the US visiting California, you're covered by this bill as the business you're purchasing from will likely assume you're a Californian. In a situation where the business finds out your real address (as is the case in many online transactions where you input your billing address) you probably won't be covered unless the wording of the bill specifically forces businesses based out of California to apply this rule to all business they conduct. I'm mostly curious about the online transactions, as that seems like a pretty big motivation to exit California if you're a business owner.
I also live in Oregon, and I’d be willing to bet that this comes down to a legal argument. Meaning if you don’t think a fee is fair you can pursue legal action. The effective way to regulate this would be have an agency that tracks this stuff and when something is amiss, the offender gets fined.
Which is to say that if you wanted to pursue this, I doubt it would be worth your time being out of state.
Everyone always says this, and it's basically never going to happen, at least in the US.
Tons of places have tried to ban tipping and just include the service in the cost of the item. They nearly always revert because the best workers leave to make more money at a tipping joint.
If tipping is banned in a place (by the local government I mean), where exactly are the "best workers" going to go? Are they going to pack up and move somewhere else?
Also, how are the tipped staff the "best workers"? They're just servers. All they have to do is take an order. It's incredible how much money they expect for this, when it's something that would be more efficiently done with an iPad. In US restaurants, they're even too lazy to bring the food for you; I guess they're too busy trying to act like the customer's new best friend.
> If tipping is banned in a place (by the local government I mean), where exactly are the "best workers" going to go? Are they going to pack up and move somewhere else?
Tipping was banned in seven US states about a hundred years ago. For the most part, People simply ignored the laws. They were all repealed or found unconstitutional after a couple decades. I am not aware of anywhere in the world where tipping a server is illegal.
> Also, how are the tipped staff the "best workers"? They're just servers. All they have to do is take an order.
"Best workers" would include highly competent servers who are a direct cause of repeat business. A good server adds to the experience beyond the food and ambiance and help turn new customers into regulars. Regulars are the lifeblood of most restaurants.
> It's incredible how much money they expect for this, when it's something that would be more efficiently done with an iPad.
Servers can make suggestions based on your preferences, make sure your dietary restrictions are handled, answer questions about the menu... these are experiences I have all the time and I'm certain an iPad would be worse.
> In US restaurants, they're even too lazy to bring the food for you; I guess they're too busy trying to act like the customer's new best friend.
Servers bring out the food I order. I don't even know how to respond beyond that.
Maybe you're just going to really bad restaurants?
>A good server adds to the experience beyond the food and ambiance and help turn new customers into regulars.
What, by acting like their best friend?
This is definitely something weird about America. Here outside America, it isn't like that at all. There's no tipping, and servers just give you what you ask, though of course they'll answer questions and such. But they don't socialize with you; I don't need to pay someone to act like my friend and chat with me. It's only in American restaurants that I've had this annoying experience.
What is certainly true is that Americans are culturally more friendly toward strangers. Americans smiling and talking a lot is a cliche at this point. However, I would bet the "best friend" experiences that you have had would be nothing but simple pleasantries to a typical American. Tipping culture has little to do with it; "friendliness" is regarded as an element of excellent service here. Even in situations where no tip is ever expected, such as in a clothing store, workers are trained to be as friendly and overly helpful as possible.
For what it's worth, I have memories of extremely friendly waitstaff in Europe -- dare I say "American-esque". Just this summer, a French bartender in the Marais asked where we were from. When we answered "the US", she launched into a story about a trip she'd taken to New York. She talked about how much she loved seeing a Broadway show, Central Park, and MoMA. I watched her carry on with a British couple and many French patrons in the same way, returning to grab us another glass of wine and chat some more. The French people present seemed just as happy to chat with her as we were.
I have similar stories from London, Florence, Barcelona, and Tokyo (just off the top of my head). It's certainly not common, but I've seen it several times.
Americans often say most Europeans are stiff and uptight. Europeans often think the opposite of Americans. You seem to have a bit of a chip on your shoulder about it, but it's just a cultural difference that you're choosing to find distasteful.
No, as an American expat, I find American tipping culture distasteful in the extreme, as well as Americans' countless justifications for it (and also their justifications for the horrible bathrooms). America is also the only place I've eaten where the server continually interrupts my conversation just to ask "how's that tasting for you?". Everywhere else, servers know not to interrupt people unless they have a good reason.
Thing I love about tipping is I know the money is going to workers not the owner. Probably the difference between me and you is I like and respect service workers. So I like tipping them.
Do you tip your cashier at the supermarket too? How about the guy who cooked your food in the kitchen in the back? What about the person who cleaned the toilets in the bathroom; do you track them down too and give them a tip?
In better-run countries, servers are actually paid a normal wage and we don't act haughty and make ourselves feel superior to others just because we can throw money at service workers like they're some kind of charity case.
Not just that, some businesses that try no-tipping end up having to raise their prices significantly more than the average tip amount, since paying their workers a higher non-tipped wage means they have to pay more in payroll taxes too.
> This bill would provide that a rental company is not in violation of unlawful advertising, displaying, or offering a price for a good or service for excluding from the advertised, displayed, or offered price of a rental vehicle charges that are disclosed to the consumer in compliance with the above-described provisions.
So....basically nothing changes. You're always privy to the disclosure at the time of sale anyway when you see the charges right before you fork up your credit card.
Seems like legislators just needed some bullet points for resume padding.
I don't quite see how an overdraft fee (one of the examples given) is a junk fee - it costs the bank real money to cover the loan they are effectively giving you when you are in overdraft.
In the recent past, US banks were found to have specifically designed software to calculate how to best re-order customer transactions to maximise overdraft fees.
Banks also generally make it hard/impossible to opt out of overdraft, something that would probably be preferable to many customers. Overdraft fees are a huge source of income these days.
Adding further: many banks make it difficult or impossible to opt out of overdraft programs.
I had to have a huge argument with my local rep. She kept insisting "what if there isn't enough money to cover the transaction?" and did not seem to understand that it was perfectly acceptable to me for such a transaction to fail, rather than succeed and incur a substantial fee.
To anyone reading this, you often need to write a letter to the bank.
I was quite irritated at the time and made the bank manager give me a piece of paper which he then accepted as a "letter".
Don't get me started on the level of irritated you need to get a bank manager to void protocol, lol.
Yes, especially at the big banks. Either they became big by making more money charging fees or they stopped caring about their customers because they’re too big to care.
Smaller online banks & credit unions typically don’t have any fees now.
She very likely understood but was just under immense pressure from her boss.
The same play dumb routine was very common here in the UK too. They made a ton of money on overdraft fees until 2020 when the law banned the outrageous fees.
I think they’re implying that the banks shouldn’t reorder the charges and should pick up the phone when we call them to opt out of overdraft altogether.
Sure. And I would love to do everything in person. But let's face it, half of every company makes you learn their internal systems before they'll even talk to you. Even Amazon forces you to select a purchase before putting you in touch with a rep. If you don't, it tells you "putting in wrong information leads me to make errors and unable to route your request"...
What the hell?? My guess is banks have to talk to you because of regulations, but let's not pretend they wouldn't ignore you if they could.
> Is there something preventing them from visiting the bank manager?
Yes. Time. Poor people don’t have time to argue with every company that nickel and dimes them. Most people are working during bank hours. They’re working multiple jobs so they can keep the lights on.
A $35 overdraft fee hurts but it’s not enough to sacrifice a shift where you are guaranteed to make $70 for the possibility of getting $35 back (which is by no means guaranteed since they signed a contract that says the bank can take $35 from them).
$35 is a very strategic number, isn’t it? It’s just enough to maximize profits but not quite enough to get most people to navigate customer service, which is likely going to go nowhere.
Last time I had issues with my bank, they had special help set aside for us premium customers. The regular teller wasn't even authorized to fix that, so I don't want to know how long I would've spent there without the special status.
1. historically poor person, they don't want to deal with them and just want to charge them the $35 per individual overdraft, or whatever insanely high charge it is.
2. Poor person works hours that make it impossible to visit or even call a bank. No really, working 1 job with insane hours or several jobs with even more insane hours are not uncommon for poor people.
3. They shouldn't be re-ordering charges in the first place to have the worst possible result and it continues to perpetuate the harm we place on those who have less.
Number 2 is the absolutely loudest of these by several miles. A person being able to visit, or even call, a bank during operating hours is an enormous privilege that the people that are harmed by these overdraft fees, in the majority of cases, do not enjoy.
Write a letter. Before you dismiss this, too, I inherited my dad's papers. There were an awful lot of letters to businesses for various reasons, some with disputes. It worked for him.
Does this come from the same reasoning where the way you get a good paying job is by walking in the front door and giving a firm handshake to the owner?
Addendum: nevermind that during this whole time of unfortunate and now very slow because "mail" correspondence, especially when the circumstance described is of a bank re-ordering transactions such as to cause the most possible overdrafts given a time range, this person's whole paycheck they need to survive may have been trapped or eaten by the overdraft fees if there's 4 or 5 of them. Yes, some people make that little.
If you can't walk into the branch, use the telephone, or write a letter, your best bet is to diligently keep track of your balance. Banks also offer overdraft protection, for an additional fee.
When I was in line, every person in front of me asked to see the manager for something stupid. They didn't see the manager. It was three hours, in the middle of my work day, before I got qualified help.
Banks in the US must provide a way to opt out of the overdraft "service", after which they will simply decline transactions instead of overdrafting the account and charging for the privilege.
you don't see how going to the bank during work hours to get an overdraft charge would be difficult for a lower income person? I'm going to guess you live in the suburbs for one and that you have a vehicle and a flexible, white collar work schedule.
If it was a loan the fee amount would never exceed the overdraft amount. But the fee is usually huge compared to the amount the bank is covering. No one should be taking a loan out at those terms.
For example, if you overdraft by $1 you could be charged $35 as a cost of this “loan”. No one should take out a loan at 3500% interest. You’d get a better rate at a payday lender.
Since this “loan” amount is not related to the cost of the service I’d call it a junk fee.
The first time I opened a bank account, I was thinking, "The banker has been telling me about overdraft for 15 minutes straight, and I still have no idea why this is a thing." So bizarre. I asked at the end, can I just turn this off, answer was no.
If a bank covers an overdraft, then the customer doesn’t have the money to pay it back, where does the money come from? Whose balance sheet if not the bank’s?
That is already how it works. The fee doesn't change their ability to get money back whatsoever. The fee just punishes the person who screwed up more than they're already punished by being broke.
It's a loan until the customer pays it back, and loans cost money to cover. Except the overdraft fee is usually some insane % interest, to the point where nobody would take that loan unless it were by accident... So in short, it's a scam.
If customers are afraid of the fees, they're more likely to keep some minimum balance in their account. Checking accounts don't generally provide interest (or at best, token interest). Multiplied by millions of customers, that $200 sitting in checking rather than savings, CDs, or other instruments is a nice chunk of change for the bank to loan out.
I'd want to see some numbers here. But the fees might be directly predatory or they might just be high enough to offset the cost of actually overdrafting to the actual predatory behavior of trying to force people to bank more of their money with lower interest rates.
Exactly. The checking vs savings thing is bogus too. I asked the banker when I opened my first account as a kid, what's the point of using the checking account at all, she had no answer.
or even slimier, prior to the federal credit protection act, you could have $0 in the bank, then deposit $10, then later in the day, make 10 transactions of $1 each. and they would rearrange the transactions, putting the deposit in at the end of the day and the charges right when they happened, and charge you TEN separate overdraft charges for those 10 transactions at $35 each. then, your balance at the end of the day would be -$340. after which they would charge you an additional overdraft fee that day and every day following for a negative balance penalty. and then maybe an additional charge every once and a while for "extended negative balance" as well as charge you a monthly fee since you don't qualify for free checking that month since you have a negative balance. AND the checking account fees would also create an overdraft charge.
it was such an awful racket that was only allowed to go on as long as it did because it mostly just affected poor people.
Imagine being the engineer who implemented that reordering logic. How would your even sleep at night having built a thing that so obviously existed solely to prey on the vulnerable.
I don't think it applies to overdraft fees despite what that article says. They are talking about advertising a price, and whoops, you find out that there are lots of extra fees when you go to pay.
> But they share a commonality in that they "far exceed the marginal cost of the service they purport to cover," according to the Consumer Financial Protection Bureau (CFPB)
Ironic when the same day, California Gov. Gavin Newsom vetoe'd bill intended to limit the price of insulin, and thus access to essential health care for many.
There used to be moderate republicans in California. But the cuckoo puff wing of the party pushed them out. Not the democrats cunning schemes. Democrats implemented a jungle primary in order to try and fix that problem.
> Newsom is the same party as the legislative supermajority.
FPTP is a major part of the reason why there can be a wide disparity in position on currently salient issues between a legislative supermajority and a governor of the same party, since it is why we have ridiculously “big tent” parties.
Most of the things in the US people blame on FPTP are caused by primary elections, and California doesn't use the usual primary system because it has jungle primaries.
And IRV for local elections, but you don't see micro-parties in SF.
> Most of the things in the US people blame on FPTP are caused by primary elections
No, most of them are caused by FPTP [0], which very strongly encourages low dimensionality of political dialog and a two-party system with two roughly-equal national parties, with a strategic interest in negative campaigning and alienating voters, since driving slightly more of your major opponents voters away is just as effective as winning over votes.
Some are more precisely caused by legislative bodies with independently elected members in single-member districts.
> and California doesn’t use the usual primary system because it has jungle primaries.
Jungle primaries in no way mitigate the effects of FPTP on duopoly (they aren’t much different than majority-runoff, except that there is always a runoff even if there is a first-round majority, and the two rounds are separate by a much greater interval of time than is usually the case for majority-runoff.
> And IRV for local elections, but you don’t see micro-parties in SF.
IRV (1) is not used for most local elections in California, and (2) offers little if any mitigation of the effects of FPTP elections (it is, as the name suggests, modelled very closely on majority-runoff voting), and (3) is only used in SF for elections which are explicitly non-partisan.
[0] “FPTP” is used in a somewhat loose sense here, encompassing single-winner vote-one election methods including majority-runoff as well as plurality (FPTP in the narrow sense).
Same in Eu: those that don't pay the taxes present their trade number and get the tax knocked off - often at the register (seen it often where a tradesperson just needs some quick items).
Prices for the rest of us are visible and are what we pay.
No guessing involved.
So now these fees will be presumably less hidden, but does it really change things ? The junk fees appear as a fixed line item on the bill. Instead, much like the side-effects disclaimers, they will appear somewhere on the first screen. Something like, "Uber adds $5 + 25% to your order" in tiny text somewhere.
Thats a big improvement because you can back out before investing all your time configuring your cart if you know fees are higher than worth it to you. Or comparison shop easier.
It would be a good idea to make in other places too, so that the advertising of prices will not be deceptive, so that you will know what they are. If someone charges you money they did not say (due to the service that was agreed on), it is false advertising and they should not do that.
However, there might need to be nuanced, such as if there are both mandatory and non-mandatory fees in a service. It will need to be managed in a satisfactory way which does not hide any fees but ensures which fees are not mandatory, must somehow be specified so that you can know what fees to expect. Furthermore, if fees are not mandatory then they must tell you the fee before you decide to purchase that optional feature. (For example, in a hotel there might be a fee for parking that only applies if you use the parking; they should mention that so that you can add it up yourself before you ever go there, and you will know exactly how much money you need.)
Just need other states to follow suit. However, I personally haven’t dealt with hidden fees and don’t know how prevalent they are in the US. Is it a widespread issue? I suppose none of the companies I do business with have them.
Where I live (major southeast US city) there's a 50/50 chance there will be some random bullshit fee (sometimes even more than one!) tacked onto the bill (and I'm not talking about tax or a tip).
Happens all over. I have seen "employee" fees (I guess it's good to have employees), covid recovery charges (I guess I'm glad I didn't get covid there), and other surcharges.
The bogus fees are always taxed, and then the full amount is used to compute a recommended tip (even at food kiosks.)
I agree it would be ideal if taxes were displayed in the price, but they are a known constant easily accounted for.
The types of fees I'm referring to are included at the bottom of the menu in 2pt font. You're typically already halfway through ordering before discovering that you'll randomly be charged an extra 20% because the restaurant relies on misleading consumers about their prices to draw them in.
Given that they compute the tax on your receipt, they could compute the tax up front unless it depends on delivery location - which they need to ask for anyway.
I just moved into an apartment advertised at $1,420/mo that is costing over $1,700/mo because of extra fees only mentioned in fine print inside a 100+ page lease. The "no hidden fees" ISP that I'm now forced to use has over $30/mo in hidden fees. It's not just prevalent, it's business as usual for every company everywhere -- because they can and they know nobody will do anything about it.
Oh weird, how common is this? I rented from 2002 until 2020, and never experienced anything like this. The advertised rent was always the same as the check I'd mail the landlord every month. Sure, I had to pay for electricity, internet, etc. on my own, but that's expected and spelled out in the lease agreement.
One thing I did learn was to check on things like ISPs beforehand. You know the address of the place, so you can visit your preferred ISPs' websites and see if they offer service before you sign the lease. Ditto for cell service; when initially looking at a new place, I'd always check my cell phone to make sure I'd get decent service inside.
There is a fudge factor there that the landlord can play with. Common utilities like sewage, sometimes water, and some other stuff can be tacked on to the monthly bill. Some buildings will also make a deal with comcast and take a cut out of internet/cable. It varies based on the jurisdiction and what they can get away with. A typical case would be 10% or so in junk fees.
Unfortunately noone knows what Newsom is willing to sign, because he doesn't comment on any legislation until it gets to his desk and then randomly vetoes half of it.
will this apply to foreign transaction fees that Banks charge when someone books a flight for example originating from a foreign country to USA? These fees (~3% of whole transaction $)sneak up into the CC statements and always surprises me.
This seems insane to me. Paying your employees a living wage is just another cost of producing the food, it should be part of the menu cost like everything else.
Splitting it out is no more sensible that adding "building rent" or "ingredient cost" as extra line items on the final bill.
This practice is becoming widespread in the Bay Area, and I saw this in Boston earlier this year on a business trip (and what made it worse was that the particular restaurant I ate at didn’t announce the fee in the menu; it wasn’t until I saw the check that I saw the 4% surcharge). I refuse to dine at restaurants that charge “kitchen fees” or “service fees.” There are still restaurants that don’t engage in this practice, but more are adopting it. Unfortunately if I’m with someone else who invites me to a restaurant that engages in such practices, then it’s harder for me to boycott.
I have no issue with restaurants who want to use service fees or kitchen fees, provided they're entirely clearly displayed before ordering.
If you add a 4% kitchen fee to the bill, my typical 18-20% tip becomes 14-16%, exactly the same as if you added a "parties of 6 or more have an automatic 18% service fee" then my tip becomes 0% (on top of the 18% you're already charging me).
If you try to sneak in a 4% fee that wasn't disclosed, let's just say that my tip changes, but does not become larger, if I discover your deception.
> If you add a 4% kitchen fee to the bill, my typical 18-20% tip becomes 14-16%, exactly the same as if you added a "parties of 6 or more have an automatic 18% service fee" then my tip becomes 0% (on top of the 18% you're already charging me).
It's unclear to my why you're equating tips with the bill (which 4% kitchen fee is part of, it's not gratuity). One of these goes to the peons, the other goes to the restaurant.
Your approach is just doing the the restaurateur's dirty work of fleecing the employees' tips by shifting it directly into the restaurant's pot. Congratulations, working as intended from the restaurateur's perspective.
i'm assuming the use a flat number of expected guests to arrive each day so that each guest is paying the same amount of that prorated "cost". if not, do they start increasing each guest's prorated amount to cover shortfalls until the day when only one guest shows up and is expected to cover the full rate?
the entire "making up shorted earnings via tips" is utter bullshit
It should be, yes. But consider the approach from the capitalist mindset. If, instead of charging your customers more (which disincentivizes their patronage) you can arbitrarily leave that portion of your employee’s wage on the customer’s shoulders. Someone else will pay the expense. And the government says it’s totally okay. And the restaurant industry is already razor thin margins.
Wow and not even vetoed by a governor who vetoes things coming from his own party because it's a POTUS election year.
I can already see the gotcha capitalism lobby of life insurance, cell phone carriers, spas, cruise ships, yearbook photographers, and payday lenders fighting this in court.
Unfortunately Newsom is also doing some strange presidential run attempt where he's vetoed a bunch of popular bills everyone likes, including a new public housing program AB309.
Laws like this aren't going to make services and products any cheaper. They'll just shift around and hide the fees into the core price. Sure, that's better I suppose, but end of the day still costs the same amount. Not convinced at all this is a area policy makers should be focusing on.
The issue is that you can't compare apples to apples. One company charges more built into the price, another company hides some fees you only see at checkout and can't avoid. It's not adding value and it's not improved by competition (competing with this tactic means hiding more fees than your competitor)
The law is aimed against companies who try to undercut their competitors by listing deceptive pricing. Taxes are always the same rate for a given good and location, so requiring including those would be a separate -- if related -- issue.
It bans price dripping, where you go through 6 checkout screens and each one adds a new fee.
Car dealerships are also notorious for the practice of continually adding fees after you agree to buy for the advertised price.
It also makes it harder for companies (phone companies, cable companies and ISPs, utilities, etc.) to enact stealth rate increases by adding bogus fees to your monthly bill.
It's way better! I want to be able to comparison shop: now I can judge Hotel A (advertised @ $200) and Hotel B ($179) on the same basis, without trying to guess which of them will be adding on what additional (un-advertised, and - so far as I can tell - unknowable until check-in) fees.
Whenever-ago it was hotels started doing that the extra fees were fairly nominal, and it was easy to shrug at them. Last year my wife and I stayed at a hotel (thankfully paid for by her work) with a $50 per-person/night "resort fee". In the event, neither of us used those amenities (though yes, we still had to pay: I asked), so that's not what that fee was _really_ about. It's entirely an obfuscation.
This bill adds nothing to the state budget. Allowing price discovery (and therefore free markets) to work, is what regulation should do, even under a fairly libertarian theory of government. It's certainly worthy of legislative time.
It might not be the most crucial, but it likely has widespread voter support, and it makes it harder for merchants to take advantage of customers. No, it doesn't solve California's homeless problem, but it's a win for consumers.
This comment is a partial example of the fallacy of relative privation. It's only partial because usually when people make it, they go the extra mile to include the thing that they think is more important.
You can have a debate about how to display those items on a price list, but everyone knows about them and they are expected. The whole point of this bill is to prevent bait-and-switch, where loads of unknown or variable fees are tacked on after the price is initially shown.
The one caveat I'd say about a tip is if it's mandatory. E.g. if a place requires a minimum tip amount for large parties, it's no longer a tip, it's appropriately called a service charge.