this post was submitted on 22 Sep 2024
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I was looking at a grocery receipt, and there are three different tax rates depending on the items. The receipt doesn't even specify which items are taxed at which rate - just the total at each percentage.

I understand the goal of lower or higher taxes on groceries is to incentivize purchasing healthier options over more processed foods, but does it really affect purchasing decisions when the final price of the items is opaque to the consumer?

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[–] [email protected] 28 points 2 months ago (5 children)

As a regular European I never even understood why US shops list prices without tax. It feels just dumb. When I go to store here the store is required to show final price on tag - meaning including tax and recycling/author fee if there's one. Seems much more user friendly.

[–] [email protected] 19 points 2 months ago (1 children)

As another European, I can at least understand why tax isn't represented on a US (and Canadian) website since the US is as truly united as a dysfunctional family come inheritance time and tax rates are different from state to state, but to pull that in local stores is something I can only ever see as fraud.

[–] [email protected] 4 points 2 months ago (1 children)

Yeah, I was talking about local stores mainly. Online it's understandable as every state has its own view on taxes, same as each state in EU (we're not federation though).

[–] [email protected] 3 points 2 months ago (1 children)

Even then the website can ask where are ye from and then display the appropriate prices if they really wanted.

They can do that for delivery costs, why not for taxes

[–] [email protected] 1 points 2 months ago

Yeah same in Europe with different VAT rates between the countries, select where you're from and shops will show price including local VAT which the shop will take care off

[–] [email protected] 3 points 2 months ago (1 children)

I think part of it (not a big part, but part) is that taxes differ so greatly in the US because of so many governments’ hands in the pots that it would discourage business in one town and have everyone flocking to a nearby town with less taxes.

As it is, you pay what you pay and don’t really realize the difference unless you take time to notice. I’ve only become aware of it because I realized how different my usual order at McDonald’s will differ when I’m in different cities.

In one city, my Big Mac meal will be $10.62 but in the next, it’ll be $9.35 because the taxes differ depending on where you are buying this with local city, county, and state.

If McDonald’s in Everytown, Maine showed their actual Big Mac meal price of $10.62 but the next city over in Somewhere, New Hampshire showed their Big Mac meal price at $9.35, more people would drive a little further to Somewhere for the obviously cheaper price with Everytown McDonald’s locations would suffer.

[–] trolololol 1 points 2 months ago (1 children)

So you're saying it's not ok to let people do informed decisions? Or are you saying that the city that charges less wants also to sell less?

[–] [email protected] 1 points 2 months ago

No, I’m saying that a business has something to gain in not showing customers the actual price because it can be a detriment to their profits if the customer has the full information at their disposal before making a purchase.

I’m not at all in favor of this, because this hurts me as a customer. I’m just saying this may be part of a reason for businesses to not show the actual price to the customer.

[–] RightHandOfIkaros 2 points 2 months ago

Its to entice people to spend more.

[–] ozymandias117 2 points 2 months ago (2 children)

I agree it's dumb, but I'm also trying to understand how politicians think changing the tax rate for healthier or less healthy foods can possibly affect behavior in the USA when it's set up this way in stores

There's some evidence it somehow works https://publichealth.berkeley.edu/news-media/research-highlights/do-soda-taxes-work

But I've never known what I'll be taxed on a specific item

[–] [email protected] 3 points 2 months ago

That's what's so dumb with it! As I said, in EU you see the final price, including tax. So "healthier option" with lower tax would instantly be seen as cheaper than "unhealty" one with heftier tax. This way it could actually work.

[–] AA5B 1 points 2 months ago

Sales tax rates and fees are well known. In my locale, I know food and clothing (necessities) do not have sales tax while prepared meals and most other items do. I also know there’s a deposit on carbonated beverage bottles, vice taxes on cigarettes and alcohol and tourist taxes on downtown restaurants and venues.

I try not to go where the tourist taxes are. I used to try to avoid bottle deposits but realized that many small cans and bottles help my moderation while fewer larger ones do not. Although I do agree that integrating the taxes into the price would help with comparisons, having it called out separately helps with changing habits on entire categories

Actually the gas tax being integrated into the price probably has the opposite effect. I have no idea what I’m even paying for gas tax: it’s just included. But that also means that while I’ll compare gas prices to find the cheaper price (within reason), I never think about whether I should buy gas or not (well, that used to be true but knowing the many reasons not to buy gas’s means now I have an EV - taxes were no part of that)

[–] [email protected] 9 points 2 months ago (2 children)

Good argument for the price inclusive of tax to be the price shown.

I think it’s fairly uncommon for sales taxes in the US to be intended to incentivize behavior - moreso, they are for funding local government and higher taxes are placed on things that are politically palatable in local elections - hotel rooms or restaurant/alcohol sales come to mind.

So I just don’t think we’re well practiced at mechanisms that make them work as a point-of-sale incentive, and changing the way a single class of items are priced would be complicated and surely receive pushback from retailers and the industry involved.

[–] ozymandias117 3 points 2 months ago (2 children)

My belief that it's intended to incentivize behavior is from talks about things like the "soda tax," where some goods are taxed at a different rate to try to reduce consumption

I don't understand how they can be effective when you don't see the price on the sticker, though

[–] [email protected] 1 points 2 months ago

Yeah, I agree the tax needs to be visible in the price to be effective

[–] AA5B 1 points 2 months ago* (last edited 2 months ago)

Things intended to incentivize healthier behavior are generally referred to as vice taxes, and yeah, we don’t do well at those.

We have vice tax to discourage smoking, drinking alcohol and probably a few other things but they’re completely ineffective. They really need to be a lot higher and to be more well known. For example, I have no idea what the alcohol tax in my locale is so it does not affect my behavior. Actually, the neighboring state advertises no alcohol tax so the only affect might be taking a road trip to stock up on alcohol. I do support the idea of raising that until it hurts to choose alcohol, except that it would hurt most those who can afford it least.

I like the idea of vice taxes in general, as a way to leverage the power of capitalism to improve public health. I dont know if they really work though, just that we haven’t gone far enough to see if it would work

[–] [email protected] 1 points 2 months ago

If the tax percentage was included in the itemized price wouldn't there be likely an over or undercharge in some cases where there was rounding at each listed total? It's just pennies for most transactions, but that adds up.

[–] sunbrrnslapper 7 points 2 months ago

I think the tax (including what is taxed and number of brackets) is state dependent. But generally speaking the idea is to not penalize people for buying necessities. But you are right, it is super confusing especially if not noted on the receipt. Check out Washington state's rules if you want your brain to hurt: https://dor.wa.gov/education/industry-guides/restaurants-and-retailers-prepared-food/retail-sales-tax#:~:text=Sales%20of%20prepared%20food,food%20from%20retail%20sales%20tax.

[–] [email protected] 6 points 2 months ago

Tax brackets usually applies to income tax. You are talking about sales tax which varies by state. Oregon doesn’t have sales tax and California doesn’t tax any grocery food. Maybe this is a discussion for the state you live in, not the whole USA.

[–] [email protected] 6 points 2 months ago

We ignore the tax rates. It is what it is.

[–] [email protected] 2 points 2 months ago

FWIW, both big chain grocery stores where I live (in Canada) mark the taxes charged on each item, albeit only with a single-character code that's explained nearer the bottom of the receipt. I'm surprised that it's legal anywhere in our respective countries to withhold that information.

And indeed, even though you can see the nontaxable items clearly on the receipt, that's not made clear at the shelves where the prices are posted. That's where they really need to show the price including taxes.

Some liquor stores in Canada, for example, show both prices: before and after taxes. I'll let you guess which price is rendered in the smaller font.

[–] [email protected] 1 points 2 months ago

In Massachusetts I think it generally is listed on the receipt.

[–] BradleyUffner 1 points 2 months ago* (last edited 2 months ago)

In theory, lower tax means that you have more discrenary money available to buy things.