lat9:
The current implementation of PayPal Express Checkout's shortcut button sends the cart's price without tax in all cases. If a store is configured to "Display Prices with Tax", shouldn't the price sent to PayPal be tax-inclusive?It depends who you talk to. And I'm not convinced there's a single concrete one-size-fits-all answer.
But, since there's no knowledge of the appropriate tax zone unless the customer has provided an identity, ZC has no idea which tax rate to use to calculate it for submission. That's why it doesn't. (It submits the actual price from the db, which is always stored as the pre-tax price even on sites where tax-included is turned on.)
lat9:
If it turns out that the customer's address coming back from PayPal is outside of a taxed zone, won't the tax automatically be removed on the checkout_confirmation page's display?
Yes, and then the details submitted to PayPal in step1 are completely different from what are sent later in step 2/3.
And then there's the consideration where for B2B the merchant is supposed to delineate how much of the sale was tax so that the buyer can claim input tax credits back. So in that case there's even more value to splitting it up.
So ... "it's complicated". :)