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Old 12-26-2010   #1
shortstop
 
Join Date: Dec 2010
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Default 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.)
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Old 12-27-2010   #2
Mr. Hui


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Quote:
Originally Posted by shortstop View Post
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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