Same amount? That cannot be.
On a $100 purchase the tax paid would vary by $6.86 --- Can you explain further?
Under tax inclusive the total payment is used to calcualte tax paid out of the payment tendered.
For $100 tendered in payment
tax = 0.23*$100 = $23
price = $77
Under tax exclusive calculation, price is is used to calculate to the tax to be added to determine the total payment to be rendered.
price = $77
tax = 0.2987*$77 = $23payment = $23+$77 = $100 paid.
The difference is for example like the difference in calculating odds of a gaming event vs calculating the propbability of an event happening.
The odds calcualition represents a ration of one happening to another.
The probablility calculation represents the fraction of the total.
The tax inclusive calculation is a fraction of payment rendered. Out of a bucket with 23 green marbles and 77 red marbles, 23% of them are green.
Under tax inclusive the total payment is used to calcualte tax paid out of the payment tendered.
For $100 tendered in payment tax = 0.23*$100 = $23 price = $77
And for a $100 purchase the tax paid would be $29.86, a tax rate of 29.86%, not 23%, correct?
Why is admitting this a problem?
- As others have said here, playing mathematical games with the actual tax rate just makes the whole proposal look like a scam.
I like the Fair Tax idea, but playing rhetorical games will never get it written into law.