tax-law
Calculating the sales tax on separate items on a restaurant bill
<p>Is it legal to tax each item separately?</p>
<p>I visited a Pizza place in Detroit, MI on 2/14/2016 Valentines Day. The waitress taxed each item on my bill separately: for example, she taxed me for the pizza, then taxed me for the pop, and added a gratuity.</p>

<p>Forget whether or not it's legal; it's mathematically stupid.  The store owner gets no advantage by taxing you on each individual item vs. just taxing the bill as a whole because of the distributive property of multiplication.</p>

<p>A(x) + B(x) + C(x)<br>
is exactly the same as<br>
(A + B + C)x</p>

<p>You can try this on a calculator and you'll get the exact same answer each time.</p>

<p>The only possible benefit to the pizza place by doing it that way would be the cumulative effect of rounding.  But even if they were being <em>that</em> shady, it only amounts to a few pennies per customer.  Not exactly a profitable criminal enterprise.</p>

<p>More than likely what happened is the waitress didn't quite know how to ring you up so she made corrections to the ticket trying to fix something. </p>

<p>Yes, as far as I know it is OK to do that. I have purchased items that said tax was included in the price.   I would have checked with the manager though out of curiosity.  </p>

<p>Agree with Judge Moody. Even more generally, my understanding is that the law treats sales tax as a matter between the business and the tax man. The business doesn't have to tell the customer anything about it unless they want to. That they do usually advertise how much of the sale price is going towards tax maybe can be thought of us a kind of marketing gimmick to make "their price" seem lower or more competitive. "Our price is $29.95, really it is! Never mind that we are collecting $50 from you."</p>

<p>feetwet makes a good point that the seller is not always required to collect and remit sales tax; in some cases, the buyer is responsible for paying use tax on items purchased. However, in this case, I would not expect the seller to be responsible for listing the sales/use tax on a receipt at all, let alone subject to any specific regulations. The above paragraph applies to the case where the seller is obligated to collect and remit applicable tax.</p>

<h3>The items might be under different tax schemes</h3>
<p>In <a href="/questions/tagged/germany" class="post-tag" title="show questions tagged &#39;germany&#39;" rel="tag">germany</a>, we have two kinds of VAT: 19% and 7%. 19% is for most goods while 7% is for food and books. However, Alcohol is not food and thus requires 19% taxation.</p>
<p>As a result, if you have a meal in the restaurant and a wine or beer with it, you will have listed VAT twice: once for the 19% taxation goods and once for the 7% taxation goods. This is even required.</p>
