Monday, June 21, 2010

Sales Tax on Unbundled Price of iPhone 4

Most people who tried to check for the iPhone 4 upgrade eligibility must have seen the following message : "In CA, MA, and RI, sales tax is collected on the unbundled price of iPhone."

It means that you have to pay a 9.75% (in CA) sales tax on the unbundled price of iPhone 4 ($599 for 16GB version) even though you'll be paying only the $199 upgrade fee. That is $57.xx instead of $19.xx.

The reason given is that the state of California should not lose sales tax revenue because the actual price is $599 and AT&T is subsidizing $400 of the price that it will make up by having us pay the monthly service charges.

Fair enough. But consumers also pay a sales tax (among other things) on the service taxes! Seems like double taxation.

Any better ideas, explanation...
  • and why are CA, MA and RI the only ones?).
  • What if I (as a CA consumer) purchased my iPhone 4 from an Apple store in Arizona? Would they pull up my ATT record (which they will to verify credit & eligibility) and ask me to pay the extra/CA sales taxes? Don't think they can because the sales tax would have to go to AZ. They can't split it and say $19 goes to AZ and the rest to CA!

No comments: