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12262010  #1 
Join Date: Dec 2010
Posts: 1

Need help understanding Sales Tax Rate
I'm extremely thick headed for some reason so help would be appreciated.
Ok so lets say I paid $22.69 for a pizza. The sale tax rate is 8%. Now I need to find the price of the pizza alone. My question is, why can't I just subtract 8% from the 22.69 to get my answer? When I read the problem, that's the first solution my brain comes up with (to just subtract 8% off the price that already has 8% added to it.) 
12272010  #2  
Join Date: Mar 2005
Posts: 10,648

Quote:
If you buy a $100 shirt and pay 8% tax, the final cost would be $108. This is because you added 8% of the (before tax) cost of the item. If you paid $108 final cost and took 8% of $108, it would be $8.64. This is because you are taking 8% of the final price. You actually doublecounted by 8% of the 8% tax.
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