Apple iPhone 4 for $99.00 plus approximately 33% Sales Tax????

[Mr.Black]

I went online to buy the 8 Gig iPhone 4 for a discounted price of 99 bucks.

When I get to check out I see I am being charged $34.31 in sales tax!


HELLO?

WTF?

I called Apple expecting a reasonable explanation for the mistake and to have the issue corrected when I am told they charge the tax on what the phone is sold for BEFORE ATTs discount.

WHAT?

It's a SALES TAX. The tax on the SALE!

I told them to kindly f*ck off and hung up.

I am disappointed in Apple at this time.

Will someone please explain this to me?

[SuperHans]

Fanboy chump.

[bluepoof]

Will someone please explain this to me?

Sure, a pretty decent explanation is here:  http://www.tuaw.com/2010/06/16/dear-aunt-tuaw-why-is-my-iphone-sales-tax-so-high/

The relevant part of the explanation is:

When you purchase a subsidized iPhone, the retailer becomes responsible for taxes on the entire retail purchase price, despite any customer "discount" created in exchange for contract terms. In CA, MA, and RI (and possibly some other states) those taxes are passed on directly to the customer at the time of purchase.

Despite the advertising, the true price of the Apple iPhone 4 is $599 or $699, depending on the configuration. That's the price you'd theoretically pay to walk up and purchase units without making a contract commitment.

....

Given the 'undiscounted' retail price, that's the price that sales taxes are calculated at. There is no discount because AT&T isn't having a sale on that item; it's simply kicking in a portion of the purchase price as an incentive for you to sign a two-year contract.

You're not really paying 20% in taxes, you're paying the normal sales tax rate -- it's just that you're buying into more than you think you are. The subsidy and contract hides some of your cost from the initial retail experience.

FWIW, this isn't limited to Apple/iPhones.  This is extremely common with all subsidized cell phones (which is pretty much all of them when they're discounted).

[zer0netgain]

FWIW, this isn't limited to Apple/iPhones.  This is extremely common with all subsidized cell phones (which is pretty much all of them when they're discounted).

I can understand that, BUT technically, you pay tax on the price it is sold to YOU at.  If someone else is subsidizing the cost, they should pay the relevant amount of tax.

At the very least, the "total price" should be disclosed to the buyer and the buyer told that the sales tax will be based on the pre-subsidy cost of the item.  Something more along the lines of buying a $150 item and Aunt Ruth gives you $50 towards the cost.  If you advertise the item at $99 but that's after someone else kicking in part of the cost, it's at the very least a deceptive marketing tactic.

That said....$99 for an iPhone 4, even with the $33+ in tax, is still a good deal.  Especially if you don't get tied to a contract for that price.

[Mr.Black]

There is most assuredly a contract with that price.

I will go the AT&T store, pay cash and save the $27.00.

[bluepoof]

I can understand that, BUT technically, you pay tax on the price it is sold to YOU at.  If someone else is subsidizing the cost, they should pay the relevant amount of tax.

"should", sure.  I should also have a pony and be 6 inches taller.  Life sucks.    This is how it works in California, amongst other states.

At the very least, the "total price" should be disclosed to the buyer and the buyer told that the sales tax will be based on the pre-subsidy cost of the item.

That I do agree with.  

[Mr.Black]

Poof, if you were six inches taller you wouldn't be half as cute.

[zer0netgain]

Poof, if you were six inches taller you wouldn't be half as cute.

But if you were six inches longer it wouldn't matter.

 

[Zixxerpilot]

What site were you on?

I paid full retail when I had to replace my iPhone 4 (no Squaretrade in Wisconsin). My sales tax was still less than that.


I wonder if the site was charging tax on full retail for your state for some reason.

[bluepoof]

I wonder if the site was charging tax on full retail for your state for some reason.

That's exactly what it was, for reasons posted above.  

[Mr.Black]

That's exactly what it was, for reasons posted above.  

Apple suxxors.

[Nodaclu]

Have someone in Nevada, Texas, or any other state that has no sales tax buy it for you, pay them back, then have them ship it to you. Problem solved.  

I've been doing this interwebs thing since 1994. I know stuff.  

[Rincewind]

[zer0netgain]

Have someone in Nevada, Texas, or any other state that has no sales tax buy it for you, pay them back, then have them ship it to you. Problem solved.  

I've been doing this interwebs thing since 1994. I know stuff.  

Only works if the deal is valid in those states.  

[Zixxerpilot]

Apple suxxors.

The sales tax thing has nothing to do with Apple,  it's State specific legislation.

In Wisconsin,  when you buy a subsidized device on contract,  tax is calculated on actual purchase price.

Sent from my Motorola Atrix using Tapatalk.

[Mr.Black]

The sales tax thing has nothing to do with Apple,  it's State specific legislation.

In Wisconsin,  when you buy a subsidized device on contract,  tax is calculated on actual purchase price.

Sent from my Motorola Atrix using Tapatalk.

Yup.