There is no federal-level sales tax in the US. Some states and municipalities have enacted sales taxes which generally are collected only at the point of sale and not included in the advertised purchase price. That being said, individual rules can vary some, and rates are all over the board. A high rate is found in a few cities, adding up to ~10%. Some municipalities have no sales tax whatsoever.Originally Posted by Flixy
No £74 is the net tax from me.You'd pay 149 + 74 = 223.....on a 500 profit?
Forget the business end of things, I'd want to know how to figure VAT on things I buy. The food part is especially confusing me, as a consumer.
£223 would be the tax the government takes from the £1500 sale, but £149 of that is tax I'd have paid the supplier, which I'd then claim back from the £223 I owe to the government. So I'd be oweing net £74
You guys don't normally include tax in prices do you? So basically I'd have:
Bought stock for £851+tax
Sold my product for £1276+tax
The tax I paid when buying stock can be reclaimed from tax taken when selling it (ie I only owe the government the net tax, the difference between the two).
We don't pay a tax to buy stocks. We only pay a tax on profits or when we sell. Maybe that's why I can't figure out your VAT.
I don't live in a place (or an era) where people raise their own cows and chickens for food.
He's buying stock, as in product with which his buisness is stocked. Not as in shares in a company.
Neither do I. I go to the supermarket.I don't live in a place (or an era) where people raise their own cows and chickens for food.
We're stuck in a bloody snowglobe.
Are you saying employees buying "stock shares" from their parent company pay a tax to do so?
Edit never mind, Rand is using the term stock to mean supplies for his business....
As wraith said, stock = product.
Raw materials or whatever.
That's not what lolli said. Lolli said she could buy meat, not kill a chicken she's hand-reared.I don't live in a place (or an era) where people raise their own cows and chickens for food.
Loopholes loopholes...
Is the lesson here that you either tax everything evening or nothing at all?BUSINESS | AUGUST 30, 2010
Roll-Your-Own Cigarette Machines Help Evade Steep Tax
By DAVID KESMODEL
WOOD DALE, Ill.—Scores of tobacco retailers in the U.S. are taking advantage of a federal tax loophole to offer deep discounts on roll-your-own cigarettes. But the practice is attracting scrutiny from regulators and cigarette manufacturers.
At Smoke Zone, a store in this Chicago suburb, customers one recent afternoon flocked to two high-speed rolling machines that produce a carton of cigarettes in eight minutes. The price: $21—less than half the cost of a carton of Marlboro cigarettes.
"People have waited an hour for these some days," said Taren DeNicolo, the store's manager.
About 150 tobacco outlets in some 20 states are deploying the novel roll-your-own machines to tempt recession-weary smokers, according to an estimate by one maker of the devices. But some regulators say the stores may be violating U.S. and state laws that govern cigarette manufacturing.
"These machines raise a number of questions," said David Rienzo, an assistant attorney general in New Hampshire, which has sued several retailers alleging they are acting as cigarette manufacturers and should pay applicable fees.
Here's where the tax loophole comes into play: At Smoke Zone and other retailers, The Wall Street Journal found, store employees or customers insert into the machines tobacco labeled "pipe tobacco." This substantially reduces the stores' and smokers' costs because the federal excise tax on pipe tobacco is $2.83 a pound—compared with $24.78 a pound for the rolling tobacco traditionally used to make hand-rolled cigarettes.
Congress in 2009 sharply raised the federal excise tax on rolling tobacco to help finance the expansion of a children's health-insurance program backed by President Barack Obama.
New Hampshire's Mr. Rienzo said that after the tax increase took effect, "numerous manufacturers that sold roll-your-own [tobacco] said, 'Why not just put a pipe-tobacco label on it, and you won't have to pay the increased federal excise tax?'"
Other companies created new brands they call pipe tobacco but essentially contain the same tobacco as in their roll-your-own products, said Kevin Altman, an independent tobacco-industry consultant in Richmond, Va.
Shargio Patel, president of Inter-Continental Trading USA Inc. in Mount Prospect, Ill., confirmed his company began offering pipe tobacco under its OHM brand that is similar to its rolling tobacco due to the tax increase. "We're just following what other companies are doing," he said.
Some cigarette makers decry the loophole that has created new low-priced competition. "We are complying with the law, but some companies are not doing so in order to gain an unfair advantage," said Ron Bernstein, chief executive of Liggett Vector Brands Inc., a unit of Vector Group Ltd. that is the fifth-largest U.S. cigarette maker by sales.
In the 14 months since the tax increase, the volume of pipe tobacco sold in the U.S. more than tripled to about 21 million pounds, according to data from the U.S. Treasury's Alcohol and Tobacco Tax and Trade Bureau. Rolling-tobacco sales volumes, in contrast, fell about 60%.
The tax loophole cost the U.S. government more than $345 million in the first 15 months since the tax increase, estimated Daniel Morris, who tracks tobacco production data for the Oregon Public Health Division.
Under U.S. Food and Drug Administration regulations, cigarette makers must place health-warning labels on packaging and can't use terms such as "light" in describing cigarettes—a term being used by some retailers selling the roll-your-own cartons, the Journal found. The FDA "is gathering more information about practices related to these machines to determine the appropriate regulatory response," an agency spokeswoman said.
Meanwhile, the Treasury's tobacco-tax bureau is soliciting industry input to help write new rules to clearly differentiate pipe tobacco from rolling tobacco. The process could take months, said an agency spokesman.
Some loose-tobacco makers and retailers say they are doing nothing wrong and that Congress created the problem by raising the excise tax on rolling tobacco—typically used by smokers with lower incomes—by more than 2,000%. "I don't think the founding fathers of this country meant for taxes that could put companies out of business," said Jeff Martin, general manager of Rouseco Inc., a pipe and rolling tobacco maker in Kinston, N.C.
Phil Accordino, co-owner of RYO Machine Rental LLC of Girard, Ohio, says his company has sold or leased about 200 of the rolling machines. He said his company, which is about two years old, simply has improved on gadgets some consumers use to roll their own cigarettes.
Jerry Kunz, 39 years old, left a store in Addison, Ill., recently with five cartons of cigarettes made by the machines. "They're not as good as Marlboro," he said, but "it's saving you money."
Write to David Kesmodel at david.kesmodel@wsj.com
http://online.wsj.com/article/SB1000...132202718.html
I don't see how tobacco is different by changing its name.
Yes in general taxes should be even, or there must be a clearer demarcation.
We have one of these machines in town! Was very interesting to watch the process. Lots of people standing around to watch. Some even came from Maryland!
The clerk asks what brand they want to duplicate, then they go to stacked bins and bring out the tobacco. But the clerk can't touch it, the customer has to put the tobacco in plastic cups and weigh it out (the clerk says it's illegal for them to do that, it would be "distributing tobacco"). The customer also picks the paper and filter, long or short, menthol or regular. They're basically empty cigarette paper, that look like cigarettes.
Then the customer pours the tobacco into the top of the machine, much like you'd do with coffee beans to be ground. (the clerk can't do that, it's illegal.) The computer read-out says how many cigarettes are being made per second. It makes a sort of chugging sound, and if it gets stuck, the clerk can't touch it. The customer has to reset the dial. Not sure what happens if it won't start again.....and everyone stands around watching the cigarettes coming out one by one.
People were talking about how cheap it was, and good tobacco, even cheaper than going to the smoke shops and buying loose tobacco or rolling their own. Some said they'd waited for hours and had to come back another day, because there were only 2 machines running constantly.
Very strange but novel kind of thing. People had these bunches of loose cigarettes and would step outside to smoke them, saying yeah, it's pretty good! Then they'd sit in their car and put the cigarettes in a box like a pack. I think they paid in advance and it was coded by their favorite brand. Probably to monitor favorites or something. $25 a carton vs twice or three times that for brand name cigarettes.
The store loved it, brought in all kinds of business. People watching or waiting would buy a soda or sandwich, that kind of thing. It was almost a social event, to be honest. Old geezers coming in talking about the old days when they'd roll their own, tobacco barns in Lancaster, pipes and rolling papers. Really interesting stuff. Lots of laughter and happy people.
Sounds like a nice healthy bonding experience Gee.
If it wasn't for it being hideous, cancerous deathsticks that people are bonding over.
Filthy habit.
I don't think any of us understand the legalities or taxes, though. We have shops that sell cigars, loose tobacco, pipe tobacco, rolling papers and even little personal rolling machines. No idea how that's priced or taxed. Some of the cigars are taxed less if the shop holds them in their walk-in humidor. But that doesn't make much sense either.
I think we've got an oversized paranoia about tobacco, even natural tobacco. But our state loves the tax revenue just like they love getting a cut on all beer, wine, and spirits. And lotto tickets. Or off-track betting, or strip joints. Our vices are basically funding lots of things in PA. Go figure.
It was fun, Rand.
The supermarket... of death!Neither do I. I go to the supermarket.
...
The meat doesn't come in a box for Hamburger Helper, either...
Woot, looks like you're getting around to my line of thinking...
1) o.O ("Looks like there can never be clear demarcation between prepared and non-prepared food.")
2) o.O ("Argh, it's all unfair. Maybe we should just tax food like other stuff, or simply not tax food...")
3) o.O ("Why did they even do it in the first place?")
4) o.O ("This is ruining our economy! No one eats out because of this, and wastes time cooking instead of slouching on the couch...or, working???")
5) ?????
6) Congratulations, you're me!
Last edited by agamemnus; 08-31-2010 at 04:27 AM. Reason: added another step
If it's only collected at the point of sale.. Isn't that very sensitive to fraud? E.g. claiming you buy something as a supply while using it as the end user, thereby evading sales tax?
Keep on keepin' the beat alive!
I'm not sure that the specific fraud you mention is that common, but POS sales taxes are subject to evasion, generally through the use of cash or other off-the-books accounting for sales. When it's a service one is providing rather than a good, the sales tax is pretty easy to evade.
Agreed there is no clear demarcation between prepared and unprepared food, hence why a cold sub is tax-free here.Woot, looks like you're getting around to my line of thinking...
There is a clear demarcation between hot and cold food though. There is also a clear demarcation between eating in and taking away.
Those clear demarcations are what is used for VAT in the UK.
Exception to the rule: Ice cream!
1) Ice cream must be kept cold -- warming or cooling something would be "preparing it"... even if you buy it in a box, if it is not kept cold, it will melt through its box and/or all the nuts will fall to the bottom (and then what will be left of this place??). Thus, you could either cool it for the purposes of preparation or preservation -- no clear line exists!
2) How does the seller know if the buyer will eat it there, or take it away? Assume the seller tries to shoo the buyer off the premises... you probably have this in the UK, so --- what if the ice cream store was inside the cafeteria area of a mall? Would security guards ask you to empty your pockets if you walked away with some ice cream?
Ice Cream is taxed.
If I go to Starbucks and buy a drink and muffin they'll ask me if I want to eat in or take away. The price depends upon the answer to that question. I've sometimes said take away and then sat down - not due to evade 10p of tax but because I've changed my mind, wanted the drink in a takeaway cup (so I can leave halfway through drinking it) or whatever. Never had anyone chase me out.
All ice cream? Like... what if it was in a small and "pretty" plastic/paper cylindrical box and they gave you a spoon? Would the decision to levy a tax depend on whether or not you need industrial strength scissors to cut open the fiendish packaging?
A trust based system of taxation! Well, I guess London is getting with the times, after all! Well, of course they wouldn't chase you out... you're all civilized gents after all, wot? Fancy a muffin? (and do you want it to go or not? Please say to go...)If I go to Starbucks and buy a drink and muffin they'll ask me if I want to eat in or take away. The price depends upon the answer to that question. I've sometimes said take away and then sat down - not due to evade 10p of tax but because I've changed my mind, wanted the drink in a takeaway cup (so I can leave halfway through drinking it) or whatever. Never had anyone chase me out.
Peace out mannn....
Wait, why would anyone shoo anyone off the premises? Apart from the government, I mean.
"One day, we shall die. All the other days, we shall live."
That was his only point I think...that if you did not pay the sit in the store tax...
Brevior saltare cum deformibus viris est vita
Question extending on the idea of taxes.
What about taxes on used products? Should the government get to double dip (or more) on these? Take a thrift store, consignment shop, or even GameStop as an example.
How do you draw a line between those and flea markets and garage sales? I think the "business" limit is $500 in Florida before you're supposed to be required to pay taxes, and I've helped with more than one garage, moving, remodeling sale thats blown past that.
Last edited by Ominous Gamer; 09-01-2010 at 09:57 PM.
All of this discussion only convinces me that most tax codes are an enormous resource suck. We (and bureaucrats and tax writers) could argue forever on whether a piece of toast should be taxed or not.
But the debate itself is a massive inefficiency that does little besides breed accounting tricks, feed lobbyists and pay accountants. Taxes should be simple and across the board as much as possible, with virtually no deductions.
I would gladly trade my mortgage deduction for a rate cut.
Simplicity, weeding out the fat cats and tearing down all functional government (thereby removing the inefficiency) are all on the Palin ticket, coming to a White House near you as soon as 2012. You know what to do!
In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.
It's not about dismantling government. Where do you get that?
It's about giving it a reliable and fair revenue stream that helps business grow (and pay tax dues).
That's what I've been saying for 2 decades now. And I feel it even more accute now that I don't have an actual deduction left
Congratulations America
It is nonsense to say that removing systems that do nothing more than take money from people only to give it back to them would be the end of government. There is a real difference between taxes collected that are then spent on schools, roads and even welfare and taxes that are collected and then re-distributed as subsidies to the same people who paid them in the first place.
Here in Holland most people who file for taxes do so because they have a deductable mortgage. In my case that is not different. Let me start of with saying that my recent tax 'returns' have resulted in '0' payment either way.
Now the system; taxes are collected through a payroll tax. Once a year I have to report the value of my house (which isn't taxed) then I have to report on my income, I can deduct the interest I paid, but the deductable amount is reduced with an amount that holds some relation to the worth of my house. However, if the interest I deduct is lower than the amount I have to deduct from the deductable amount I can add an amount to my deductable interest paid that is equal to the difference between the deductable interest and the amount that has to be deducted on the basis of the value of my house. The net result of my hard work on the tax return is that : my payroll taxes are equal to the income tax due.
Of course they could never consider exempting a home-owner who has a very low mortgage or none from filing for taxes.
Last edited by Hazir; 09-02-2010 at 06:07 AM.
Congratulations America
It was just a joke guysRight-wing soundbytes -> Tea Party rallies
In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.
Used products in the UK do not attract VAT since no value has been added, its still the same product. Of course if companies are making major profits selling them they're still involved with corporation tax etc
This can result in a situation where companies like Game (PC/console game retailer) can make more money selling a used version of a game than the original. A new and popular console game may attract £39.99 (inc VAT and costs of purchasing from the distributer etc), while used disc of a new and popular console game can sometimes go for as much as £35 (no VAT, no distributer just them purchasing off a customer in a "trade in").
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