Say Anything Blog

While it is OK for a corporation to pay a CEO’s income tax.
What a world,

This is stupid.  There are two ways a business can pay the sales tax:
1) Keep the price the same and pay the resulting tax for you.

2) Lower the price to the point where the price plus the tax equals the original price, making the tax less.

Let’s see this in action.  A store decides to attract customers with a reduced total cost.  Assume an item that costs $100 and a tax rate of 8.25%.

1) 100 * .0825 = $8.25 paid by the store
2) 100 = 1.0825 * x (where x is the price)
x = 100/1.0825
x = 92.37 (rounded down because the store wants to keep the total cost at or below $100)
92.37 * .0825 = $7.62 tax paid by the customer

The moral of this story?  Lawmakers and bureaucrats are stupid.

Crazy--I remember European fellow students commenting that it was always a nasty surprise when sales tax was added to any purchase.  I gotta say; they were right.

Odd as well to think that Illinois is fighting to make sure that customers see exactly how much state government is extracting from their latest purchase.  You would think socialists like those working for Blagojevich would catch on.