Jeez, the 37signals worshipping around here is getting a bit out of hand.
In all seriousness, how about vendors start pricing products with tax included, rounding to the nearest quarter dollar? Say what you will about movie theatre concession pricing, at least you're not going to walk out of there needing a tub for your change as well as your popcorn.
Same in Japan. 6-7 years ago a law was passed that all posted prices must have the sales tax figured in. I think it makes things much clearer to know exactly what you're paying.
Also, something of interest, I have a lot of friends who come over here to Japan and complain at how expensive food is in restaurants. What I noticed is that while the price on the menu is much more expensive than in the States, your final cost is pretty comparative.
As mentioned elsewhere, it's because sales tax varies from state to state and from county to county. So if you're going to advertise something for a given price, you either have to exclude sales tax or accept that you'll be making significantly less profit selling it in California than in Oregon.
It's a crazy system, but state and local governments are dependent on sales tax revenue so it's impossible to dislodge.
The system in the UK isn't exactly sane either though, as I recall from the fact that everything at Pret is advertised with an "eat in" and "take away" price since the two scenarios are taxed differently. If you say you'll take it away but then change your mind and eat it in, you're presumably in serious (theoretical) trouble.
And then you've got the Australian system which is at least invisible to the consumer but is still annoying and inconsistent to the merchant. It was going to be a consistent 10% applied to everything, but the minor left-wing parties insisted at the last minute that it needed to exclude some but not all forms of food. Meanwhile feminists have been agitating for years to get tampons excluded as well... not because any analogous male or unisex product (toilet paper?) is excluded but because they have apparently run out of any serious problems to complain about.
I used to share your confusion, so I asked some Americans and was partly converted. One reason is that having taxes "added on" means people are more aware of the tax rate and how it affects prices at the cash register.
Since there are sales taxes at multiple levels (another reason - taxes can change frequently and are far from national) having a feel for taxes comes in useful when voting since if you feel you're getting nothing for your local taxes, you can make an informed decision at the ballot box.
Why go to the effort of eliminating small coins? Why not just go ahead and switch to an electronic currency? Or at least an electronic replacement for coins and bills like they do in Japan:
Subsantial new infrastructure would have to be built to accommodate person to person transactions. When I deal with an established vendor, I use a credit card almost 100% of the time and while not electronic currency it is close.
When I buy orsell something of craigslist right now it is almost always cash and the infrastructure available would have to change substantially for that to change.
Yes credit cards are more prevalent in the US, but they have a 3% overhead, retailers eat the cost. With value points and clubs you can recover 1-2% of those fees. I think a fee-free anonymous electronic cash system like Suica would be a great alternative.
You can buy and recharge Suica cards at train station ticket machines, so they're effortless to obtain. Having been to Tokyo twice in the past 3 years, the Suica cards are a godsend. I used them only for transportation purposes, but I saw stores that accepted them.
I had a Suica card that I bought the first time I went in 2008. I didn't use up all the money that I put on the card and kept it when I came home as a souvenir. When I returned in 2010, I brought it with me, figuring that there was a time limit on the validity of the card, or that I would have to get the card re-activated first. No, it worked just like it did when I bought it in 2008. When it ran out of money, I went to a Suica-issuing ticket machine and put more money on the card. So, don't throw these cards away.
For what it's worth I just came back from a week and a half in Japan and never knew these things existed (well, I knew there was some sort of smartcard system for the subway I wasn't using, but had no idea it extended further than that). Japan is still the most cash-heavy culture I've visited.
The US, on the other hand, is the most plastic-heavy culture I've visited. It's the only place where it's socially acceptable to pay for a $1.50 cup of coffee with a credit card.
Yeah, you definitely need to have cash with you. Plan on visiting the ATM often while there, especially during Golden Week. The Suica card makes it effortless to travel on Tokyo Metro and the JR lines.
In all seriousness, how about vendors start pricing products with tax included, rounding to the nearest quarter dollar? Say what you will about movie theatre concession pricing, at least you're not going to walk out of there needing a tub for your change as well as your popcorn.