• SONAR
  • Buying in Euros? Will ECB QE move affect exchange rate for better or worse? (p.3)
2015/01/22 11:04:33
AT
Again, part of the reason Europeans pay more is the way taxes are structured. 
 
What is the VAT now?  20%?  We don't have the VAT in the States.  The Federal Gov. taxes income off the top of your paycheck.  Almost 15% of all payroll (SS and Medicare, half charged to the individual and the other half to your company).  So if I make a $100 I only see about $85 in my pocket.  The Feds also have an income tax which is dependent upon how much you make and if you have kids to deduct.  That runs for most of us at 5-10%, again off the top.  So we never see that money.  So now your paycheck is down to 75% of what you've "made."   Which means to have a $100 in your pocket you need to make $130.  But wait, there is more.  Individual States usually have a sales tax, like the European VAT (some also have income tax, too, up to 10%).  This is added on after the sale.  Cities and counties can add a tax to the sales, but most of their income comes from property taxes.  Here in Dallas the sales tax is over 8%, which includes State, City and DART (transportation).  That now gets tagged onto any internet sales.
 
So, I buy the Studio version of SONAR for $100.  And my bill comes to $108.20 with tax.  And I have to pay the sales tax too w/ money that was already taxed at least 15% by the Feds.  So to pay for the $100 I need to make closer to $140, tho those taxes are unseen in Cake's asking price.  In Europe, that $100 "costs" $120 w/ my assumed VAT.  Plus whatever taxes are charged before the paycheck and tagged on after.  I don't know what those figures are these days.
 
I know there is income tax in Europe, but the big "hidden" tax for most working folk in the States is Social Security and Medicare at close to 15%  taken off the top of your paycheck.  The VAT is more, but used to be added after the sale like our sales tax.  That was where a lot of the price difference (as far as an individual's buying power) resided - Americans paid VAT-like taxes before the sale whereas Europeans paid it afterwards.  And American sales taxes are not built-into the price Cake charges, but added after.
 
There are other reasons, I imagine, that SONAR costs Europeans more, but you have to add 15% to 50% to the stated US price to get an actual cost, so it isn't quite as large as it seems at first glance.
 
@
2015/01/22 12:02:58
tlw
In the UK we not only pay income tax but also National Insurance, which among other things goes towards funding the National Health Service, the state pension and social security (the exact NI rate varies with income, but for all but the lowest paid it's not so different to your medicare example (only we get more for our money).

The big British complaint about pricing is the long-term habit of some foreign companies to charge disproportionately high prices in the UK. One example would be the US companies who simply switch the currency symbol from dollars to pounds. So if it's $1000 it becomes £1000 (plus VAT) rather than the £662 plus VAT you'd expect from the exchange rate. To be fair it isn't just US companies that have tended to charge more in the UK market, even some British companies have been known to do it.

Sonar Platinum paid for in pounds sterling, on the other hand, costs within pence/cents the US price plus VAT at current exchange rates. :-)
2015/01/22 12:57:56
Paul P
AT
I know there is income tax in Europe...



I'll say !  It's what, 70% in places like Belgium and Denmark ?
 
2015/01/22 13:21:18
azslow3
It looks like they have country dependent price politic now, which not only depends from VAT and other taxes. So in "some countries" you can see very strange price... I was thinking that is a bug, but one other customer has got direct response from the shop support: "that is normal". I am still waiting for reply from CW, so I am not sure what is going on. My suggestion, in case the price looks suspiciously hi for you, just wait a little bit.
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