Last night I was doing a little shopping on Amazon and I came across an item that was being offered for sale by two different vendors. Here was the price summary that appeared on my screen:
So, which item is the better bargain?
On first glance, you might think the first item listed would result in a higher bill at the checkout stand. And why not? It’s $10.30 price tag is a full $3.40 more than its lone competitor selling for the seemingly bargain price of $6.90.
However, upon closer inspection, and all things being equal, the second item is actually 14 cents more expensive after including the shipping charges.
But Wait … Actually, It’s Not Quite That Simple
In case your wondering, the first item is cheaper regardless of whether or not taxes come in to play. Kinda sorta.
Let me explain:
Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. And although that means 45 states do have one, currently, most items sold by Amazon or its subsidiaries are subject to sales tax only if they are shipped to one of the following states:
- New Jersey
- New York
- North Dakota
Most states include shipping charges as part of the sales tax.
Most … but not all.
If Amazon should ever expand their list to include Idaho, Iowa, Massachusetts, Oklahoma, Utah, and Wyoming — states that, according to Quicken, don’t require sales tax on shipping fees — then the calculus changes.
For items shipped to those six states, the second item in my example would be the better buy because the resulting sales tax would be significantly lower.
Got all that?
Good, because I don’t think I could muster the fortitude to try explaining it again.