All levels of government are desperate to increase revenues rather than reducing spending, especially cutting public employment, benefits, and pensions.
Thus, governments are looking to all sorts of nickel and dime taxes to squeeze every conceivable penny out of their residents. No bagel is too small to take a tax bite out of.
New York has decided to enforce existing tax regulations whereby prepared foods served in a restaurant are subject to the state sales tax whether consumed on the premises or carried out. That’s normal in most states, but then comes the kicker. If you carry out a whole bagel, it’s not subject to the tax, but if the bagel is either prepared or sliced, then it’s subject to the sales tax. This rule caught bagel sellers by surprise and the tax is angering bagel consumers. The most amazing feature of this rule is that it is not in the New York tax code, but apparently exists in the black hole of the New York State Department of Taxation and Finance. When they decided to enforce it, they sent auditors to bagel sellers, and then assessed penalties against them for not collecting the tax.
Sliced bread in New York is not subject to the same sales tax penalty though.
New York Governor Patterson has just announced the State will impose its cigarette tax of $4.35/pack on cigarettes sold on Indian Reservations (Indian smokehouses) to non-tribal members. The issue involves critical issues of Indian sovereignty. A similar proposal in 1997 met with resistance by members of the Seneca Reservation. They shut down a 30 mile stretch of the New York Thruway. One out of every three packs sold in New York in 2009 was on Indian reservations, resulting in a $200 million revenue loss for the State.
Philadelphia is taxing a new revenue source. The Saturday Evening Post may have folded decades ago and the Philadelphia newspapers are flirting with liquidation, but bloggers are blooming. No success should go untaxed in this economy.
The City of Brotherly Love is now imposing a $300 business privilege license on bloggers. Make $25 in ads on your blog, and pay a $300 fee. But the exactions don’t end there. The city and state will then impose wage taxes, and income tax on any revenue.
One blogger, who made $50 over a few years, explained the revenue figures to the city’s tax amnesty program. A city employee responded by telling her “to hire an accountant.”
How did the city find out? Bloggers who listed the income from blogging, however minuscule, on their state income tax forms received the letters from Philadelphia.
The tax can be avoided by bloggers who blog for free. Taxing them would arouse First Amendment issues.
Question: Does Philly assess the business privileges tax against children lemonade stands, athletic booster groups with their refreshment and food stands, frequent sellers on E-Bay, and garage sales mavens?
New York’s Governor Patterson proposed earlier in the year to extend the sales tax to soft drinks with the ostensible purpose of reducing the consumption of fatty sodas. The measure died in the legislature, but will probably rise again like the Phoenix. Indeed, California already taxes soft drinks.