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Grade: 3-5
Subject: Mathematics
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Learning Objectives
1. The student will understand and explain the role of state sales taxes.
2. The student will create a sales tax chart by calculating the sales tax amount and tax inclusive retail price for 20 school store items.
3. The student will calculate subtotals, sales tax amounts, and total purchase amounts for multi-item sales receipts.
Connection to Bloom's Taxonomy
- Comprehension
- Application
- Analysis
- Synthesis
Lesson Materials
- Calculators
- Crayons or colored pencils
- Index cards
- Pencils
- Sales receipts showing sales tax amount
- Worksheets for lesson plan 7 (see sidebar)
Making Connections
Photocopy several store receipts to share with students. Receipts should not contain any personal information including such as credit card numbers, and items listed should be appropriate to share with students.
Pair students together and provide each pair with several photocopied receipts -- one from a grocery store, one from a card shop, a clothing store, etc. . .. Ask students to look closely at the receipts, and ask them what type of information is included on the sales receipts? Create a list of student responses on the board.
Some possible responses may include the following:
- Name of the store
- Address of the store
- Phone number of the store
- Store number
- Cashier number or name
- Date and time of transaction
- A list of items purchased
- Price of each item
- Subtotal
- Sales tax
- Total (including sales tax)
- Cash given
- Change received
- A tally of the number of items purchased
- Store director information
- Store hours
- Return policy
Discuss the fact that most of the information provided on a receipt is clear to understand -- the date of purchase, the list of items purchased and prices for each, change received, and others. However, what does the term sales tax mean? Are any students able to explain the meaning of sales tax? Then have the students look at their receipts one more time. Ask if the receipts provide a percentage for the sales tax?
Explain to students that there is no nationwide sales tax in the United States. Each state determines if a sales tax exists and if certain items are exempt from the tax. In some states, there may be no sales tax on unprepared food, clothing, and prescription medications. The state of New Hampshire, for example, does not have a sales tax. As of January 1, 2007, state sales tax rates range from 0% to 7.25%. Refer to the Federation of Tax Administrators at http://www.taxadmin.org/fta/rate/sales.html for an up-to-date list of state sales tax rates. This would be a great time to read aloud the R.G.'s Literary Connection for this lesson titled Taxes, Taxes!: Where the Money Goes by Nancy Loewen.
Exploring and Learning
1. Discuss with students the following basic points concerning taxes:
- Taxes are collected at the federal (national), state, and local (city or town) levels.
- Taxes are collected by the government to raise revenue (income) to provide services.
- The police, fire, highway, and school departments are examples of public services provided by and paid with tax money.
- A sales tax is one type of tax and is calculated and collected when people purchase items or receive certain services.
2. Explain that a sales tax is normally a percentage. It is calculated as a percentage of the price of a good or service and is added to the purchase price of those goods and services.
3. Provide students with the sales tax rate for your state or another state if a sales tax does not exist in your state. Refer to http://www.taxadmin.org/fta/rate/sales.html for an up-to-date list of state sales tax rates. If time allows, make a transparency of the State Sales Tax Rates from the site listed above. Discuss the difference between the states such as exemptions, and rate differential.
4. Next, demonstrate to students how to calculate the sales tax:
- Identify the sales tax rate in your state. Ohio's state tax is 5.5%, which is .055.
- Multiply this percentage by the retail price of the item(s). This amount is the sales tax. ( .055 x cost of Twister Eraser .35 = .02 )
- Add the sales tax to the retail price of the item(s) to determine the total price of the purchase.
5. If the sales tax is calculated and included in the price of an item, this is called tax inclusive pricing. The tax is already included in the price. If the sales tax is not included in the price, but is calculated at the end when all items are added, this is called tax exclusive.
6. In the United States, retailers in general use the tax exclusive approach and do not include the sales tax in the item's price. However, for a school store, an inclusive price might be easier for students and help to decrease calculation errors.
7. The Raymond Geddes School Store Operating Manual outlines some basic retail principles and states the following regarding the sales tax:
"It is the responsibility of each school store to know and follow its state law regarding sales tax. Typically, states require a Retail Sales Tax License. Then taxes are collected on all sales and remitted to the state. Students can easily create a sales tax chart to avoid mistakes. The state will supply the necessary forms for remitting taxes. Contact your state comptroller's office for specific requirements."
8. Pair students together and ask students to work together to create a sales tax chart for the 20 items on the Geddes Kit List using the appropriate state tax rate. Instruct students to complete the Geddes Kit List Sales Tax Chart by calculating the sales tax amount for each item, and the new tax inclusive retail price for each item. Students should use calculators for this activity. This chart can be used if a customer purchases a single item only.
9. Use the Geddes Kit List Sales Tax Chart Answer Key as a basis for review, assuming a 5% sales tax rate.
10. Explain that if a school store customer purchases several items, it is more accurate to calculate the sales tax on the total amount of the sale rather than at the individual item level. States may provide sales tax tables or the sales tax amount can be calculated.
11. Present students with the following scenario:
RG and Hannie are working at the Raymond Geddes Elementary School Store. Monica, Jack, Peter, Julia, and Marcus visited the school store during lunch and bought some items. Sniffer has asked RG and Hannie to calculate the sales tax for the five customers in order to complete their sales receipts.
Can you help RG and Hannie calculate the purchase subtotal, the sales tax amount, and total purchase amount for each receipt?
Challenge: If you run your own school store, or ran the school in a previous Geddes lesson plan, update the sales spreadsheet with your own sales data.
12. To help complete the scenario, pair students together and provide each group with a Sales Receipt Worksheet. Explain the following instructions, listing them on the board or as a transparency:
- Identify the appropriate sales tax rate percentage.
- Convert the sales tax rate percentage to a decimal.
- Compute the total prices for each item of the sales receipt by multiplying the quantity sold by the item's retail price.
- Subtotal the items purchased.
- Multiply the subtotal by the sales tax rate (as a decimal) to calculate the sales tax amount.
- Add the sales tax amount to the subtotal to determine the total purchase amount.
13. Ask students the following question: What is the total amount to be reported to the state based on the five sales receipts? ($.91 based on a 5% sales tax rate)
14. As a class, review the five sales receipts. Use the Sales Receipt Key for answers. Did any team come up with the correct total sales tax amount to be reported to the state?
Extended Learning and Practice
1. Practice calculating sales tax amounts using various tax rates. Complete the Raymond Geddes Elementary School Store scenario using a different sales tax rate than the one used in class.
2. Using the Internet, look up "sales tax holiday." What is this event? Identify 5 states that offer a sales tax holiday. Refer to http://www.taxadmin.org/fta/rate/sales_holiday.html for the current 2007 listing.
3. Refer to the Internal Revenue Service's Understanding Taxes website for on-line curriculum ideas and interactive programs.
Assessment
The lesson objectives can be assessed by evaluating the Sales Receipt Worksheet with the Sales Receipt Worksheet Sample Key.
Use the Assessment of Student Progress to assess students' overall abilities to meet the lesson's learning objectives, which include understanding and explaining the role of state sales taxes; creating a sales tax chart; and calculating subtotals, sales tax amounts, and total purchase amounts for sales receipts.
Closure
Provide each student with an index card and have them answer the following questions on one side of the card:
1. What are two new things that you have learned?
2. What else would you like to learn about this topic?
On the back side of the index card, instruct the students to draw a picture of something they learned about during this lesson. The index cards can be hole punched and held together with a simple shower curtain ring.
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