In the Empire State, you can have a bagel just about any way you like it, but according to the state’s tax code, it’s going to cost you. In an attempt to relieve the state’s nearly $9.2 billion deficit in 2010, consumers have to pay 8 cents more for a bagel that is sliced.
This illogical tax has had negative impacts on local business owners. In 2010, New York State discovered Kenneth Greene, owner of several Brueggers Bagels franchisees, was unknowingly not enforcing a tax on sliced bagels.
According to Greene, “The bill they sent us for that is exorbitant. We hired an attorney.” The business owner claims that the state has never acted on this law before, “We’ve been audited three or four times in the last 15 years and never once has this issue been raised.”
As can be expected, Greene’s customers were not happy with the price increases of his products, Greene stated: “They felt we were nickel-and-diming them. They thought we were charging them to slice a bagel.”
But it was not Kenneth Greene’s choice to increase prices; he was forced to by the government. Unsurprisingly, the tax code does not offer any clear cut explanation to this arbitrary fee. The Wall Street Journal describes:
“One source of confusion is that the rule isn’t spelled out in the tax code. And while sliced bagels are subject to sales tax, a sliced loaf of bread at a bakery isn’t, according to tax officials.”
New Yorkers are also taxed for bagels with toppings. Legally speaking, putting cream cheese or butter on your morning breakfast reclassifies it from a bakery item to a restaurant item. The New York State tax code differentiates between items eaten in store or off the premises. To clarify, in order to be in compliance with law, business owners are supposed to tax customers based on where they eat the items sold to them. One businessman on Manhattan’s Upper East Side doesn’t buy into this notion. Sammy Abbas, store manager of Pick-A-Bagel, argued:
“Why should I charge tax if a customer gets a croissant or a bagel with nothing on it, whether they eat it there or not? It’s not fair to customers.”
Not only is this tax uninformed, it has not been universally applied. Florence Wilson, founder of Ess-a-Bagel in Manhattan does not pay this tax and in an interview with the Wall Street Journal said, “I hope they don’t come after me for that.”
The New York Times has claimed sales taxes, like this one, can “shift behavior in unintended ways especially if they are not applied uniformly across all goods.” The New York State tax on bagels is just another example of nanny state politicians interfering with how Americans live their lives.