I'm confused about paying sales tax

[cantdrv55]

My wife bought her phone from Best Buy for $50. She paid sales tax on $50. She bought the same phone for our son from Verizon two weeks later because it was no longer on sale at Best Buy. The phone was on sale for $170 minus the $70 rebate that brought it down to $100. However, Verizon said they'd have to charge her sales tax based on the full price of the phone, which was $359.

Why did Verizon charge sales tax on the full price but Best Buy did not? Is this a scam on Verizon's part?

[old man neri]

Not a scam. It's called a rebate. You pay the full price and tax and then they give you money back (rebate).

That's how mail in rebates work.

[djmcmath]

I'm confused about sales tax too. And property tax. So I earn money, on which I pay taxes to the state and local governments. Then I go to buy something, and I get taxed when I buy it. Then, if I keep it, I pay tax every so often just because I have the thing.

Does anyone else notice this? Ever add up what portion of your income goes to taxes -- beyond the obvious income tax portion?

Dan

[widgeon13]

And when you get social security you pay tax on that, which you already paid tax on before and of course SS was originally not taxed..........

[Heel n Toe]

http://www.fairtax.org/

What is the FairTax plan?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

The FairTax:

Enables workers to keep their entire paychecks
Enables retirees to keep their entire pensions
Refunds in advance the tax on purchases of basic necessities
Allows American products to compete fairly
Brings transparency and accountability to tax policy
Ensures Social Security and Medicare funding
Closes all loopholes and brings fairness to taxation
Abolishes the IRS

"The complexity of the tax code results in at least $350 billion in underpayments of owed taxes every year and requires $265 billion annually in tax preparation costs."

http://www.fairtax.org/site/News2?JServSessionIdr001=u0pv3nxa92.app8a&page=NewsArticle&id=10057&news_iv_ctrl=1521

[cantdrv55]

Originally Posted by old man neri

Not a scam. It's called a rebate. You pay the full price and tax and then they give you money back (rebate).

That's how mail in rebates work.

Is it the same way for store rebates?

[Hugh R]

Gasoline

You pay road tax on it and sales tax on the entire price of the gas.

[MattKellett]

Or how about like my wife, you work all your adult life as a x-ray tech. Then you come down with a dreaded disease called Lupus, you claim disability, cause thats what you have been paying into all these 25 years and the IRS taxes your disabilty income!!!!

[Noah930]

Originally Posted by MattKellett

Or how about like my wife, you work all your adult life as a x-ray tech. Then you come down with a dreaded disease called Lupus, you claim disability, cause thats what you have been paying into all these 25 years and the IRS taxes your disabilty income!!!!

Were the disability insurance policy premiums paid for with pre-tax or post-tax dollars?

Back to the OP: I would have thought that you'd be on the hook for sales tax on $170, not $360.

[LeeH]

I guess it depends on whether it's a rebate or discount.

$100 item with a $25 discount = $75 selling price. Multiply $75 times your sales tax rate.

$100 item with a $25 rebate = $100 selling price. Multiply $100 times your sales tax rate then subtract $25.