The coins were variously made of aluminum, plastic, or even cardboard. The purpose was to "save" the customer from being overcharged when he paid the sales tax on small purchases, say a dime on which the tax at 2% would be two mills and paying a penny would lose the customer 4/5th cent. Not paying at all would cost the state 2/5th cent, hence the creation of the tax token. Different states issued different denominations, 1,2, and 5 mill values.
The use of these tokens prevailed throughout the thirties and into the forties. Eventually someone figured out that the whole thing was too cumbersome, yet the government could not afford to simply eliminate the sales tax, so the bracketed tax was devised. Say at 2% the table would indicate a tax on purchases of one to twenty-four cents would be zero; from twenty=five to seventy-four cents, one cent tax; seventy-five to $1.24, two cents, and so on. This required the publication of sales tax tables for the merchant and the general public. Which of course was not cumbersome.. Or perhaps it was, who knows? This method is still being used in some states, Except of course a two-percent tax is a long-dead dream. Also some municipalities have jumped on the bandwagon and imposed their own sales taxes in addition to the statewide taxes. In some states these now total as much as 9.45%. Ours is seven percent except in certain cities where it is more, at least on some items.
And. Some states have a tiered system in which the tax rates vary for different items purchased.
The mind of man is infinitely convoluted and forever seeking more ways to complicate our lives.
Image:By $1LENCE D00600D at English Wikipedia, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=32892050
8 comments:
Could we characterize those complications as the "tyranny of good ideas?"
Chuck, I think that is an excellent way of looking at it.
Our sales tax is 9.225% unless shopping or eating at a restaurant in one of the new development areas of the city. In this case it is 10.225%. Quite a difference from the Colorado Springs rate of 7.63% with groceries excluded from taxes. Since what we mostly spend our money for is groceries, we have really noticed the difference.
Through complaining for this Monday. : )
Vee, come on back to Hoosierland! Indiana (so far) has the good grace to exempt groceries and prescription meds from sales taxes. Indy has added a local sales tax on entertainment, dining, and lodging which pushes those things near the statosphere. Oh, well. If you can afford to dine out you can afford a couple additional cents tax.
I must admit I got very confused reading this but it made me think, back in the day before 'cash registers' did all thinking and calculating, how did the cashiers determine the amount of tax when some items were taxable and some not? In the olden days in NYC only non-food items were taxed and we always put those first when checking out, but I'm pretty sure not everyone did that. I do remember clerks consulting printed charts to determine tax amounts in other types of stores. Here in Virginia there are levels of state tax in grocery stores and some counties/cities add their own taxes so a grocery receipt will have as many as three lines of taxes...
Grace, computers: there is the key. The computerization of merchandising has made it possible to scan products, sort tax levels, and compute final amount owed. All the clerk has to do is take the money, or the plastic, and we move on.
New Jersey does not charge sales tax on unprepared food, household paper products, medicine, and clothing. New Jersey does not charge sales tax on gasoline, but gasoline is subject to a $0.145/gallon excise tax. Property taxes are sky high!
Ilene, on gasoline in Indiana: federal 18.4, state 29.89 then on top of that, the 7% sales tax on the non-tax portion of the fuel cost. How did you get clothing exempt?
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