Feb 26

Discount and Sales Tax

I was talking to a math teacher the other day about how she wants her students to be able to see how sales tax and discount work in conjunction (that you still have to pay sales tax AFTER taking the discount into consideration, which students seem to forget frequently). After thinking about it for a few minutes, here’s one idea for a quick lesson. How would you improve this?

  • Overstock.com sells pretty much anything imaginable and has discounts on pretty much every item that are displayed in the following fashion:

overstock.com photo

  • The teacher could find a couple items like this (specifically items that students may get excited about) and could do some quick review of percentages/discount by whiting out or covering up the “Save” percentage on screen and having the students calculate that percentage.
  • The teacher could model for the students how when you add items to your shopping cart and go to the checkout, sales tax does not appear on screen. This would allow the teacher the opportunity to explain that since Overstock.com is an online store and is not located in the same state from which you are purchasing, you would not have to pay any sales tax on your purchase.
  • Give the students the following task:

“Your parents have decided to remodel your house and they have graciously given you $500 that you can spend at Overstock.com on improvements for your bedroom (or other areas of your house if you are feeling generous). Make a list of the items you want to purchase and the price for each of these items. Research all the sales taxes of the U.S. Assuming that you could find the same items in a physical store for the same discounted price as on Overstock.com, which state in the U.S. would be the cheapest to buy from? Which would be the most expensive? How expensive would purchasing these items in Virginia be? Show your work to prove your point.”

  • Possible reflection/discussion questions:
    • What did you learn about online shopping?
    • What did you learn about sales tax?
    • Could someone’s purchasing habits be adapted based on what you’ve learned? Explain.

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