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.
