From bloggers to bagels, cities and states up the ante on bizarre taxes

By Emily Iles

Should sliced bagels be taxed at a higher rate than their unscathed counterparts?  New York says yes, and they’re cracking down on bagel-cleaving scofflaws.

In New York state, whole bagels which are then carried out of a shop intact are not subject to sales tax.  But slice it, dice it, schmear it, make a sandwich out of it, or eat it in the store, and poof!  It magically becomes taxable, by about 8 cents a bagel according to one vendor.

That’s potentially thousands of dollars every year hinging on the location and condition of bagels.  It’s a tax that isn’t clearly spelled out for businesses and, so far, scantily enforced.  It’s a sneak-attack tax, if you will: a dormant, hair-splitting tax resurrected that takes additional revenue from small-business owners in a way they weren’t prepared for.

Philadelphia has earned similar ire for applying business status to blogging: if you’re a blogger in Philly reaping pennies off of web ads, get ready to lose that income.  NOT ONLY will you pay income tax, but the city also wants a $50/year “privilege license”, no matter how weak the trickle from Google AdSense.  Some fear that this fee is not just noxious, but may limit free speech.  After all, a blogger has given out their name, address and personal information to the city whose license fee they may want to criticize.

The list of puzzling tax-targets goes on, from fresh blueberries (as opposed to frozen) to decorative pumpkins (as opposed to edible); fountain drinks (versus bottled or canned) to sparklers and rubber snakes (versus non-surprising toys, perhaps).

Lines had to be drawn somewhere, but where the lines were drawn is what is truly alarming: in the middle of bagels, for example.  Minutiae like whether or not a bagel is sliced put a burden on businesses, and that burden doesn’t make sense.  The cleavage of bagels is not particularly good or bad, and doesn’t drastically change the nature of the sale.  The law in turn is opaque and has resulted in a system that costs a small business real cash and would likely cost the government plenty to enforce.

Now, I don’t know if a blog that generates ad revenue should be considered a business.  I’ll let you readers duke it out.  But it’s clear that bloggers making ten or twenty bucks a year, who comply with the law by claiming their income, are drastically put-upon by a law that probably pre-dates the internet.  Philadelphia could have raised this predicament as a problem in need of review, but instead they seem to see it as a way to raise more revenue, regardless of the discouraging effect it might have on citizen journalists.

City and State governments are certainly looking for ways to increase revenue, and may continue to look at loopholes and technicalities to pad their budgets.  We should keep reminding our elected officials that we want transparency, simplicity, and common-sense tax policies that don’t hurt the citizens that government exists to serve.

Emily Iles
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