The ONLY reason to use an inclusive rate is to hide the size of the exclusive rate. No one would propose such a nightmarish method otherwise.
Multiplication is easier than division for the simple fact that the latter uses the former.
New car 50 Gs including tax. What is the tax? 50000/1.23=40650.41, 50000-40650.41= 9349.59.
The ONLY reason to use an inclusive rate is to hide the size of the exclusive rate. No one would propose such a nightmarish method otherwise.
Baloney,
| The Wrong Camera: The Denominator of the Tax Incidence Equation. Dan R. Mastromarco; LLM, Argus Group, Washington D.C. Tax Analysts Document Number: Doc 1999-32575 Citations: (October 8, 1999) B. Use a Consistent Size Screen to Portray It. [118] When considering the rate of a national sales tax, or any tax for that matter, one must always decide which of two distinct means of portraying this rate -- the "tax-inclusive rate" or "tax- exclusive rate" -- best expresses the tax burden. Which one we employ changes absolutely nothing in terms of the taxes that are actually raised or paid by the taxpayer under the taxing regime examined, in the same way that measuring a journey in inches or meters does not change the distance. However, how the rate is presented changes how the relative tax burden is perceived by those who wish to compare the merits of competing tax proposals. Confusion results when we compare alternatives under different measuring scales. [119] The sales tax is particularly susceptible to this confusion because state sales taxes are normally expressed on a tax- exclusive basis, while income, estate, and payroll taxes, as well as the Flat Tax and other VATs, are normally expressed on a tax- inclusive basis. If we were to express a sales tax rate as a percent of the product price as is done in the states, we would be unfairly overstating the burden of the tax when we compare it to what it is meant to replace at the national level. Or conversely, we would be greatly understating the relative burden of the federal income and payroll taxes for those who don't have time to learn the different measuring systems. |
Suggest you read the whole article sometime.
Multiplication is easier than division for the simple fact that the latter uses the former.
On a calculator or computer, as any vender of goods is going to use? Come on give me a break.
For the customer, all that is required is multiplication and addition and subtraction to check his receipts out. Even that is done with calculators by folks nowdays.
New car 50 Gs including tax. What is the tax? 50000/1.23=40650.41, 50000-40650.41= 9349.59.
See you mangled that problem well.
New Car 50Gs including tax = $50,000.
Tax inclusive rate, = 0.23.
0.23 * $50,000 = $11,500 dollars tax to the government.
Price with out tax = $50,000 - $11,500 = $38,500.
Customer checks price without tax on the reciept = 38,500 yep.
Customer checks tax inclusive price on the reciept = $50,000, Yep.
Customer checks amount of tax on the receipt = $11,500, Yep.
And if he is really paranoid, customer adds tax amount on the reciept to price without tax = $50,000 check to see if that equals tax inclusive price on the reciept, Yep.
Now, you were saying? Absolutely no arithmetic different from what a customer does checking the numbers on a sales slip today.
"Easier" is in the eye opf the beholder. It really isn't any easier at all since division is just the reciprocal of division.
With a simple calculator it is truly trivial.
However - a prime reason to use the tax-inclusive rate is not to fool anyone (except looey) since both t-i and t-e are stated by backers of the FairTax. It is more meaningful when contrasted with the IT rate structure so people can relate to where the rate is in relation to the income tax rate structure.
If the IT used tax-exclusive rates there would be no confusion on your part. Do you suppose our government is trying to hide the size of the tax brackets citizens get into with the IT?????