I was looking at a grocery receipt, and there are three different tax rates depending on the items. The receipt doesn’t even specify which items are taxed at which rate - just the total at each percentage.
I understand the goal of lower or higher taxes on groceries is to incentivize purchasing healthier options over more processed foods, but does it really affect purchasing decisions when the final price of the items is opaque to the consumer?
As a regular European I never even understood why US shops list prices without tax. It feels just dumb. When I go to store here the store is required to show final price on tag - meaning including tax and recycling/author fee if there’s one. Seems much more user friendly.
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.
I agree it’s dumb, but I’m also trying to understand how politicians think changing the tax rate for healthier or less healthy foods can possibly affect behavior in the USA when it’s set up this way in stores
There’s some evidence it somehow works https://publichealth.berkeley.edu/news-media/research-highlights/do-soda-taxes-work
But I’ve never known what I’ll be taxed on a specific item
That’s what’s so dumb with it! As I said, in EU you see the final price, including tax. So “healthier option” with lower tax would instantly be seen as cheaper than “unhealty” one with heftier tax. This way it could actually work.
Its to entice people to spend more.
I think the tax (including what is taxed and number of brackets) is state dependent. But generally speaking the idea is to not penalize people for buying necessities. But you are right, it is super confusing especially if not noted on the receipt. Check out Washington state’s rules if you want your brain to hurt: https://dor.wa.gov/education/industry-guides/restaurants-and-retailers-prepared-food/retail-sales-tax#:~:text=Sales of prepared food,food from retail sales tax.
In Massachusetts I think it generally is listed on the receipt.
