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Re: Confusion on adding percentage of cost to that cost.
Posted:
Jul 12, 2005 8:10 PM


On 20050712, ticbol <ticbol@yahoo.com> wrote: > Taxman sees sale is $10.58 > Taxman gets his 5.75% of that, which is $0.61 > > Taxman doesn't knowand he never caresthat 5.75% of $10 was added > to the $10. > > Taxman never cares too if the original $10 were sold at $20. In this > case, if sales is $20, tax is 5.75% of $20.
Taxes are computed differently in different countries (and even different states in the US).
In California, the sales tax is expressed as a percentage of the price charged *before* sales tax is added on and retailers are allowed to advertise the price without including the taxes. Thus a $1 item actually costs the customer $1.08 (if you are in a county with an 8% sales tax ratethe rate varies from place to place in the state). The retailer gets to keep $1 and has to send the $0.08 to the state.
Other places may well use a different basis for the computation, but this is not a math question but a taxlaw question. I believe that most states in the US use the pretax price as the basis, but I have not researched it other than in the states I have lived in (Illinois, Michigan, New York, California).
 Kevin Karplus karplus@soe.ucsc.edu http://www.soe.ucsc.edu/~karplus Professor of Biomolecular Engineering, University of California, Santa Cruz Undergraduate and Graduate Director, Bioinformatics (Senior member, IEEE) (Board of Directors, ISCB) life member (LAB, Adventure Cycling, American Youth Hostels) Effective Cycling Instructor #218ck (lapsed) Affiliations for identification only.
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