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Why you shouldn’t compare refunds
In an earlier post, I explained how tax refunds work, using buying products at the grocery store as an analogy.
I used three different trips to the store:
- You buy a candy bar for $1.79 with two dollar bills. You get 21 cents back as change.
- You buy a loaf of bread for $3.29 with four dollar bills. You get 71 cents back as change.
- You buy a pint of ice cream for $5.49 with a “$1 off!” coupon and five dollar bills. You get 51 cents back as change.
Which of these grocery trips would you rank as “best”? Is it the one where you got the most change back? That is, would you rank the trip where you bought the loaf of bread as the “best” trip to the grocery store?
Now imagine on that same trip you brought a friend. Your friend brought one crisp, new five dollar bill and bought the same loaf of bread you did, for the same price of $3.29. Your friend pays with the five dollar bill and gets $1.71 back in change.
Your friend got more change than you did! To the tune of an entire dollar!
Would you conclude that your friend is really lucky, has a personal relationship with the store manager, or knows some secret trick to get more change from grocery store self-checkout machines?
Would you feel jealous, assume the self-checkout machine robbed you, or demand the store manager give you an extra dollar also?
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