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by jedberg 2918 days ago
No it doesn't. The business isn't paying the tax. They are only collecting it on behalf of the taxing agency.
3 comments

Maybe a more precise wording is "you can be forced to collect tax from others and must pay registration fees to collect said tax by politicians you do not elect and who act knowing you are powerless to object."

The sentiment is still the same.

While that may be true, it's meaningless. As a tourist, you are also subject to tax that was enacted by representatives you didn't elect. You can choose not to go there, just like a business can choose not to sell to someone who lives there. In California, every city has it's own sales tax, so every city I go to is taxing me without representation.

There are many many cases in the US where you are taxed without a choice of the representatives. You have a choice not to be taxed though, by not going there or doing business there.

> The business isn't paying the tax

I despise Norquist, but I believe the words above are not true in a consequential sense. The law may say 'the state taxes the consumer', but who is meaningfully affected?

The business handles the mechanics of collecting and paying the tax. And whose pocket the tax really comes out of depends on the elasticity of demand, IIRC my economics. That is, it depends on how much the business can raise the price without hurting profits:

If the product is highly price sensitive, something like a can of peas, then the business can't raise the price very much without hurting demand and the tax will effectively come out of the business' profits. If the product is highly price insensitive, such as life-saving drugs, then the cost of the tax will be passed on to the consumer.

The sales tax is collected after the transaction, so price elasticity has nothing to do with it.

What you wrote applies to other things like an increase in rent or property tax, which has to be built into the cost of the product. But it doesn’t apply to sales tax.

I'm not sure what you mean - would you explain? To the degree demand is inelastic, the seller will pass on the cost of the tax to the buyer. The buyer knows what the final bill will be, regardless of when the government collects the tax.

(Also, when I buy things in U.S. states with sales tax, the tax is on the bill and even if it's not part of the advertised price, I expect it and it's part of my purchase decision. People regularly cross state lines to avoid sales tax.)

The business is paying 3% in credit card fees to collect the tax. Quite a favor!