Ron Larson
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2.3 Consumption Taxes

2.3 Consumption Taxes
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  • 1. Sales Tax on Oil Painting

    You buy the oil painting in an art gallery in California. What is the state sales tax? (See Example 1 and Example 2.)

    • Worked-Out Solution

      The state sales tax rate in California is 8.25%. This implies that the sales tax is

      Note that this is only state sales tax. Some counties and cities in California impose additional sales taxes on items sold within their jurisdiction.

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      _____    _    _     ______     ___              
 /  ___|| | || | ||  /_____//   / _ \\      ___   
| // __   | || | ||  `____ `   / //\ \\    /   || 
| \\_\ || | \\_/ ||  /___//   |  ___  ||  | [] || 
 \____//   \____//   `__ `    |_||  |_||   \__ || 
  `---`     `---`    /_//     `-`   `-`     -|_|| 
                     `-`                     `-`
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  • 2. Sales Tax on Oil Painting

    You buy the oil painting in an art gallery in Missouri. What is the state sales tax? (See Example 1 and Example 2.)

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      _____     _____      _____     ___      _____   
 /  ___||  |  ___||   / ___//   / _ \\   / ____|| 
| // __    | ||__     \___ \\  | / \ || / //---`' 
| \\_\ ||  | ||__     /    //  | \_/ || \ \\___   
 \____//   |_____||  /____//    \___//   \_____|| 
  `---`    `-----`  `-----`     `---`     `----`
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  • 3. Finding a Sales Tax Rate

    You buy the oil painting in Washington, D.C. The sales receipt shows that you paid $75.54 in sales tax. What is the sales tax rate in Washington, D.C.? (See Example 1 and Example 2.)

    • Worked-Out Solution

      To find the sales tax rate, divide the sales tax by the purchase price.

      The sales tax rate in Washington, D.C. is 6%.

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     _____       ___               __   __   _    _   
|  __ \\    / _ \\      ___    \ \\/ // | |  | || 
| |  \ ||  | / \ ||    /   ||   \ ` //  | |/\| || 
| |__/ ||  | \_/ ||   | [] ||    | ||   |  /\  || 
|_____//    \___//     \__ ||    |_||   |_// \_|| 
 -----`     `---`       -|_||    `-`'   `-`   `-` 
                         `-`
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  • 4. Finding a Sales Tax Rate

    You buy the oil painting in New York. The sales receipt shows that you paid $88.13 in county sales tax. What is the county sales tax rate? (See Example 1 and Example 2.)

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    __    __   __   __              ______    ______  
\ \\ / //  \ \\/ //   ____     /_   _//  /_____// 
 \ \/ //    \ ` //   |    \\    -| ||-   `____ `  
  \  //      | ||    | [] ||    _| ||_   /___//   
   \//       |_||    |  __//   /_____//  `__ `    
    `        `-`'    |_|`-`    `-----`   /_//     
                     `-`                 `-`
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  • 5. Crossing a State Line to Make a Purchase

    You can buy the oil painting in Mississippi or drive 20 miles to an art gallery in Alabama to make the purchase. Which option would you choose? Explain your reasoning. (See Example 1 and Example 2.)

    • Worked-Out Solution

      The sales tax in Mississippi is

      The sales tax in Alabama is

      A person can save in sales tax by purchasing the painting in Alabama.

      Note that sales tax laws vary from state to state. In some states, residents owe sales tax to the state regardless of where the item is purchased.

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     __   __     ___     __   __   __   __    _____   
 \ \\/ //   / _ \\   \ \\/ //  \ \\/ //  /  ___|| 
  \   //   | / \ ||   \   //    \ ` //  | // __   
  / . \\   | \_/ ||   / . \\     | ||   | \\_\ || 
 /_//\_\\   \___//   /_//\_\\    |_||    \____//  
 `-`  --`   `---`    `-`  --`    `-`'     `---`
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  • 6. Out of State Sales

    Under what conditions is it beneficial to a consumer to drive to another state to make a purchase? Give specific examples.

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     __   _      ___     _    _     _____    _    _   
| || | ||   / _ \\  | \  / ||  |  ___|| | || | || 
| '--' ||  / //\ \\ |  \/  ||  | ||__   | || | || 
| .--. || |  ___  ||| .  . ||  | ||__   | \\_/ || 
|_|| |_|| |_||  |_|||_|\/|_||  |_____||  \____//  
`-`  `-`  `-`   `-` `-`  `-`   `-----`    `---`
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  • 7. Finding the Sales Tax Rates on a T-shirt

    You are given the sales receipt shown after buying a T-shirt. Find the sales tax rates indicated by the receipt. (See Example 2.)

    • Worked-Out Solution

      The sales tax rates are

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      _____     _____     ______   __   __   __   __  
 |__  //   |  ___||  /_   _//  \ \\/ //  \ \\/ // 
   / //    | ||__      | ||     \ ` //    \   //  
  / //__   | ||__     _| ||      | ||     / . \\  
 /_____||  |_____||  /__//       |_||    /_//\_\\ 
 `-----`   `-----`   `--`        `-`'    `-`  --`
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  • 8. Out of State Sales

    Some people avoid paying sales tax by purchasing items out of state. This is a big problem for many states. What would you do as a state legislator to fix the problem?

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     _    _    __   __              _____     _  _   
| || | ||  \ \\/ //   ____     |  ___||  | \| || 
| || | ||   \ ` //   |    \\   | ||__    |  ' || 
| \\_/ ||    | ||    | [] ||   | ||__    | .  || 
 \____//     |_||    |  __//   |_____||  |_|\_|| 
  `---`      `-`'    |_|`-`    `-----`   `-` -`  
                     `-`
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