Originally Posted by
t325
So if taxes were included in the advertised price, a company could never advertise that a product costs $X.YZ in a commercial or print ad since the cost of the product could be different in two stores across the street from each other if that street is the boundary line between two municipalities.
Or for the very small differences in sales tax between municipalities/counties within a state, you just eat the extra 1/2% in tax in the high-tax municipalities or take the extra 1/2% in tax in profit in the low-tax municipalities.
With a few exceptions (NH/OR communities bordering on MA/WA), in general you don't get cases where you have a single decently-large advertising market where there are huge gaps in sales tax rates, and in those cases, there's already a lot of sales/use tax avoidance going on (do recall that in most states, you are supposed to pay use tax on goods purchased out-of-state.)
The argument could be made that at the very least, in-store advertising and price tags could be inclusive of sales tax, however people aren't going to be too happy when Apple advertises in their keynote that the newest iToy is $399 but the sign in the store says it's $437.28
People would get used to it pretty quickly, given that they already get the same increased price at the register...
Moreover, given that we're talking about tipping, I was thinking primarily about restaurant menu prices where there's little advertising of menu prices outside of (A) fast food, and (B) special promotion items.
Otherwise, prices vary highly between individual stores in a chain, and where there is a fixed promotional price chain-wide there's already often a decoupling of that to local costs (although some high-cost areas, it's a "$1.29 menu" or similar, rather than a dollar menu at osme fast food joints.)
For retail would be pretty easy also to still display the pretax price, just require the after tax be more prominent:
iJunk 2013: $437.38
($399 + $38.38 tax)
(also, where is the sales tax 9.6%? The highest rates I'm aware of are in Chicago, at 9.5%, and a two smaller CA cities in LA County -- Pico Rivera, and South Gate -- have a whopping 9.75%.)
The only way it could realistically work is if we got rid of all state and local sales taxes and went with one flat sales tax rate across the country like VAT. Good luck with that though.
Hardly; it just limits the degree to which advertisers can usefully give an exact price in national advertising. Expect $399 to become "around $400" or similar weaseling if they did it.