Earlier quoted context omitted.
Isn't the problem the other way around? In Europe taxes are included in the price from the start.
No, those two things are orthogonal. The convention in the US is to compute the tip on the pre-tax amount. If the pre-tax price is $10, a 20% tip is $2 and 8% tax is $0.80, for a total of $12.80. Now, some of this software has come along and tried to sneak in a change to the formula where the tip is computed on the post-tax amount. They take $10, add 8% tax to get $10.80, and then compute 20% of that for the tip, for…
Obviously this would indeed increase tip amount, but it would definitely decrease confusion and probably fix itself over the long run if the new tip amount was too big.