Regulation of the Day 149: Sliced Bagels

In New York State, sliced bagels cost 8 cents more than unsliced bagels. It’s not because they’re more expensive. The marginal cost in labor and equipment is practically nil. Nor is it because bagel shop owners are greedy. Shops in Connecticut and New Jersey don’t charge more for sliced bagels. And there’s nothing about New York consumers that makes them more susceptible to predatory bagel pricing. The reason is government.

Albany’s legislators are in quite the fiscal mess right now. Short of cutting spending, they’re trying everything they can to plug their $8.5 billion budget deficit. The Wall Street Journal explains how this affects bagels:

“In New York, the sale of whole bagels isn’t subject to sales tax. But the tax does apply to “sliced or prepared bagels (with cream cheese or other toppings),” according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it’s never been touched by a knife, it’s also taxed.”

So there you have it. Bruegger’s, a New York bagel chain, put signs in its stores telling customers that “We apologize for this change and share in your frustration on this additional tax.”

Bruegger’s shouldn’t be apologizing to its customers. State legislators should be apologizing to theirs. If they had been able to keep state spending in check, there would be no need for the tax.

(Via Reason’s Katherine Mangu-Ward)