Need help understanding Sales Tax Rate - XP Math - Forums

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 12-26-2010 #1 shortstop   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.)
12-27-2010   #2
Mr. Hui

Join Date: Mar 2005
Posts: 10,609

Quote:
 Originally Posted by shortstop 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.)
Let's try a simpler example.

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 double-counted by 8% of the 8% tax.
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