Hacker News Reader

Comment by jrockway | Hacker News Reader

This sounds like double taxation. The "subsidy" is something you pay for every month on your bill, which you also pay taxes on. So they get you for their imaginary cost of the phone, then they get the actual cost (minus what you paid upfront) as part of the taxes on your monthly bill.

I am all for paying my fair share of taxes, but when two groups in the same organization can't communicate and it costs me money, that upsets me.

View on HN

They do communicate, it's only CA law that sales tax on phones are for the unsubsidized price; it's not like either party is unaware of this.

You also don't ostensibly pay a 'subsidy', they're 'giving' you the $400 in exchange for a 2 year service contract, not explicitly baking the subsidy into the price (e.g. after your contract is up, you do not start paying less just because you've 'paid off' the phone). That's also not the imaginary cost of the phone; as someone who's lost an iPhone, there's nothing imaginary about that $400 :)

What about the taxes I'll pay for the 2 years of service? IIRC, there are quite a lot of taxes built into my phone bill.

Why don't Apple/AT&T legal representatives argue this in court? It sounds like it's in their interest not to be doubly taxed. From the business class I took, sales tax is effectively split between the seller and the buyer, even if it's the buyer who formally pays it.

Because double-taxation isn't illegal (AFAIK -- I certainly haven't passed the CA state bar). The state can tax whatever it wants, with a few exceptions like interstate trade specified in the federal constitution. If the people don't like the taxes their government decides on, the proper solution is to pick a government with more popular policy choices.

To be fair: There are taxes and fees on phone service, but sales tax on subsidized equipment isn't one of them. You could equally argue that rolling a hardware purchase into a monthy "service" bill is an effort to avoid taxation on what would otherwise look like a purchase on credit.

This is one of the reason why policy wonks prefer a VAT instead of a pure sales tax; the accounting is easier and more objective.

Reply on news.ycombinator.com