Taxes

In the United States, most places have a sales tax charged on when anything is purchased.  In some places, sales tax is not charged on food items.  Of course, we have lessons designed to remind students of how it is calculated.

In Canada, there is something similar to a sales tax but it is referred to as a ‘Value Added Tax’.  The last time I went to Canada, the VAT was added when I checked out.  Then when I crossed the boarder, I stopped at the duty free place and filled out a bit of paperwork and got all the VAT back.

Now that I am in Germany, I’ve learned they also charge a VAT but it is included in the price shown rather than being calculated separately.  That makes it easier to calculate if you have enough money. According to my niece, the VAT accounts for 19% of the price so if I purchase something for a Euro, 19 cents is the tax.

Now think about how often we have students find the amount of tax due on purchases.  We do not give students enough practice in determining the tax rate nor do we provide a total amount and a tax rate so students can calculate the amount spent on tax.

Most students would claim 19 % is high but when we discuss taxes, we usually look only at sales tax. We do not look at road taxes which can be quite high or the taxes on cigarettes, especially in New York City. Do we ever take a moment to enlighten students on property taxes, inheritance taxes, windfall taxes, or any number of taxes most of us pay as adults?

Many of the above mentioned taxes are included in the price of things already but we do not realize it.  One such example is gas.  If we want students to understand more about taxes such as these, show them how some states have added taxes to interesting things.

A few years ago, I was in San Francisco when taxes were added to fines so most tripled. An example would be the $17 jay walking fine that suddenly jumped to $51 when they added a %200 percent tax to it.  The last time. I stayed at a hotel, I found a strange charge on my bill. It took the front desk about 10 minutes to get an explanation for it. Apparently, the city of San Diego had levied a tax on the total taxes charged.  In other words, they taxed the taxes.

I have a friend who is building a new house near San Jose. He commented he is being taxed for all the wood he purchases for his house in addition to paying a sales tax on it.  I realize we want students to be able to calculate tax and tips but it wouldn’t hurt to expose students to other taxes so they have a chance to transfer their knowledge.

Let me know what you think, I’d love to hear.