Survivor 14

[Ghoulish Delight]

Originally Posted by Alex Stroup

Except they don't. Everything you buy in Hawaii has (had, anyway) 4.17% added. I never saw anybody competing on price by eating some of the tax.

In a system where the tax always existed, it's not really visible. If the tax were to suddenly disappear, I bet 4.17% of my income that prices would not simply fall down to the sans-tax level, they'd settle somewhere above it. How much so depends on the price elasticity of the product.

And industry wide I'd wonder as well since almost everything sold in Hawai'i in imported from somewhere else so that purchase price is dictated by forces outside of the tax structure in question.

Surely an added wrinkle complicating things, but the importers and resellers still mark up the price from whatever they're paying to import. The amount of that markup is still subject to the laws of supply and demand.

But yes, there is undoubtedly some price suppression caused by the tax, but the point was to demonstrate the recursive taxing that turns a 4% announced tax into a 4.17% real tax. And that it would work the same way if you want to give someone $1 million, after taxes.

Yeah, I know. I just like to bring up that finer point of sales tax that most people aren't aware of. A X% increase in sales tax does not translate directly to an X% increase in prices to consumers.