5 Downright Silly Sales Taxes

Several months ago, we wrote about New York State’s decision to crack down on bagel vendors who weren’t charging an 8.875% sales tax on sliced bagels. Believe it or not, that’s not the silliest sales tax story of the year.

Over at Reuters, they’ve put together a list of the most wtf-inspiring sales taxes around the country.

In addition to the bagel boondoggle, the list includes:

Belt Buckles: In Texas, your belt isn’t subject to sales tax, but that belt buckle sure is.

Cup Lids: The state of Colorado recently decided that lids for disposable drink cups are non-essential food packaging and therefore not exempt from sales tax.

Haunted Houses: While movie theater, Broadway and concert tickets are not subject to NY State sales tax, admissions to haunted houses are.

Tethered Hot-Air Balloon Rides: Kansas has decided that an untethered hot-air balloon is carrying passengers and therefore qualifies as a sales-tax-exempt form of air transportation. But if it’s just a balloon that never comes off its tether, then it’s an amusement ride and subject to sales tax.

From bagels to belt buckles: 2010’s craziest taxes [Reuters]

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  1. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    Also in NY, if your KitKat bar is with the candy, it’s candy: TAXED
    If it’s with the cookies, it’s a cookie, NO TAX.

  2. georgi55 says:

    Virginia – Cold sub counts as “food for home consumption” so it’s 2.5% tax. Hot sub counts as prepared meal so it’s 5% tax.

    • Pax says:

      Virginia taxes groceries?? Or just prepared meals?

      • outoftheblew says:

        In Missouri, we don’t have a state sales tax for groceries, but there are still county/city sales taxes on groceries. But prepared meals get the full state sales tax.

        • Pax says:

          Holy cow. O_O I hope I never have a reason to move to any of those states …!!

          Here in Massachusetts, we have a 6% sales tax, a 6% Services tax, and a 6% Meals tax (all recently increased from 5%).

          The sales tax, and I believe the service tax, don’t apply to “essentials” – medicine, clothing, groceries, healthcare, etc.

          The meals tax only applies to fully-prepared foods. If you order out for pizza, or dine in a rastaurant … Meals tax. If you buy a steak at the supermarket … no tax.

          And those sorts of taxes, along with the Income tax, are all State level only; local cities or counties can’t dip their fingers into that pot, no matter how much they might want to.

          • Skeptic says:

            Actually, the value of clothing above $175 IS taxed in MA. It’s a form of luxury tax. You can buy a $174.99 garment and pay no sales tax, but if you buy something fancy, you owe on part of its value.

            I used to live in Boston. Now I live in AK, where there are NO TAXES to keep track of, except “invisible” ones like gas and booze taxes (both very high here). No state sales taxes, no state income taxes, and they pay me $1700/year to live here.

      • DogiiKurugaa says:

        Virginia taxes groceries. Its very annoying

      • Coles_Law says:

        KS does too.

    • David Ciani says:

      California is like that too… Our Subway got in trouble for not doing it right. If its hot or “for here” its always taxed, if its cold to-go its “groceries” and not taxed.

  3. BorkBorkBork says:

    My my, government sure is getting desperate trying to feed their ‘crack addiction’ to our tax money.

    • JulesNoctambule says:

      And no ruling body has ever relied on taxes before now, right? The Domesday Book was totally just for fun!

      • rmorin says:

        There is a difference in relying on taxes for essential services, and as the commenter put it “feeding the crack addiction”. I can guarantee these examples above where the result of someone thinking “hey I bet we can get more money from X category … let’s see how”. When there is any deficit at any level of budgeting (county, state, federal) the thought must be what can we cut, not simply how we can get more money. States are bankrupt because of outrageous spending on inflated pensions and abused social programs, not because they are having a hard time getting money from their inhabitants.

        • Skyhawk says:

          Exactly.

        • DFManno says:

          Running a few items through the rightwinger-to-English decoder ring:

          “inflated pensions” – “more than I get”

          “abused social programs” – “any government spending I don’t directly benefit from”

          • rmorin says:

            Great! So both you and Skyhark agree to send any money you do not use for food, or shelter straight to cash strapped governments! Thanks for being so generous, they promise to spend it responsibly. By responding to my comment you insinuate that we should be giving money without question to the government to compensate people that get “more then [you] get in pensions” and for “government spending [you] don’t directly benefit from”. As I said in my original post, I would like to look at how a government spends, but y’all seem content just sending in a check so thanks!

            /End being sarcastic

            You make a lot of assumptions about my lifestyle, you have no idea who I am or where I work so your statements are without merit and incredibly ignorant. Additionally people who want to take a critical look at how governments on all levels spend money are not “right wingers” as you call them, more so they are sensible people interested in the future of the town/county/state/country they reside and are democrat and republican alike.

            Do you understand the GROSS inequity between public/unionized pensions versus private non-unionized pensions? Does an able bodied 45 year old ex-janitor deserve full benefits and 80% of their salary paid for IN FULL until they die by the taxpayers of a particular state because he lucked into a crony state job in his 20’s and worked there for 20-25 years? (This is an EXACT example in an agency within the state of Massachusetts, and no it’s not a police officer it is a janitor) That is the system you are defending, so I unless you really think that the above scenario is a legitimate allocation of state money, you should not go off about “rightwingers” as a slang for people who care how the government spends money.

            • Excuse My Ambition Deficit Disorder says:

              You lost me at Great!

            • DFManno says:

              You only care about how the government spends money when it isn’t your party doing the spending.

            • novajosh says:

              Thank you rmorin. I wish more people and elected officials would talk about how public sector pensions which are funded by the taxpayer are bankrupting this country. Even if they were not bankrupting this country, it is not right for the taxpayer to flip the bill.

    • DH405 says:

      Yeah! Rabble rabble, Kenyan! Rabble rabble, Guns! Rabble rabble, Taxes!

      ..9/11.

    • Consumeristing says:

      Sales taxes are regressive, but as always, any Team Blue idiot would cream at the very whisper of “tax” and start mouth-breathing for more of it because everyone knows it goes to the government fund for Equality and not to developers, wars, and bank bailouts.

  4. ludwigk says:

    This is not quite the same, but a falafel vending booth at my local farmer’s market had to stop selling assembled falafel pockets because [whatever permit allows them to sell a sandwich] expired and they had not renewed it. Instead, they sold a box with everything that goes in a falafel pocket.

  5. HalOfBorg says:

    Why not just tax all sales at one rate, dump all income taxes and let poor people get a card to exempt them. Felony to use it fraudulently.

    The thought of all those out of work IRS agents and tax consultants warms my heart.

    • Megalomania says:

      There are about a dozen problems with that, mainly that consumption based taxes favor the rich (who spend a much smaller proportion of their income than the middle and lower class) and classifying “poor” is about as hard as classifying pornography; you might be able to look at it and tell, but good luck codifying anything.

      Removing individual returns and taxing only businesses based on income and payroll is the more common solution proposed, but it runs into its own problems regarding real estate, capital gains, and so on.

    • DFManno says:

      How do you feel about about a sales taxes of 56 percent? That’s what it would take to “dump” income taxes in favor of a national sales tax, according to Citizens for Tax Justice. Add to that state/local sales taxes (e.g., 8% in Philadelphia, PA), and the cheapest 2011 car on the U.S. market (Hyundai Accent GL) goes $10,705 to $17,556.

      That would be a major drag on the economy, I would think.

    • zzyzzx says:

      And the reason poor people shouldn’t be paying taxes is???
      Part of the reason why we are in the financial mess that we are is because 1/2 don’t pay any income taxes. Plus the card thing is a huge invitation for fraud.

  6. shepd says:

    Canada has the same tax requirements on Bagels. Or, at least, Ontario does. Even down to the slicing. And that’s why I order them plain with a knife. Because I’m just that cheap.

  7. sqeelar says:

    Actually in Texas, it depends on how large the belt buckle. One that is big enough to serve as a dwelling for two or more people, with connections for plumbing and electrical is taxed in the manner of a house purchase.

  8. Hoss says:

    In Massachusetts, we do not have a tax on services however a business conference call where an outside vendor is used to connect is taxable. Also our tax only applies to tangible property, however software delivered electronically is taxable.

    Go figure

  9. scurvycapn says:

    The belt buckle tax does make some sense (to me at least). The article makes no mention if standard belts with standard buckles are taxed (oh, $1 of that $12 belt is for the buckle, so you are taxed X cents). So, I am going off of the assumption that the article is referring to separately sold belt buckles.

    Belts, while commonly used as an accessory, can be a required piece of clothing. Separately sold “fancy” (more than likely, tacky) belt buckles are not a necessity, they are a luxury item.

    • BBBB says:

      If the belt buckle tax is on buckles over a certain price/size, then they are reclassifying the belt buckle as jewelry instead of clothing. This makes sense considering the buckles I’ve seen while visiting Texas.

      Massachusetts has (had?) a tax on expensive clothing. Inexpensive clothes are a necessity, designer outfits are a luxury.

      Most of the articles on “Silly Laws” are based on rulings on loopholes or ambiguous situations not addressed in the law. [i.e. one I’ve seen is that in some town it is illegal to tether your elephant to a parking meter – the law was a general livestock law, not specifically elephants.]

  10. mikec041 says:

    In North Carolina, if you purchase a newspaper in a store it’s taxed but if you buy it from the vending machine it’s not.

    • JulesNoctambule says:

      Same goes for most vending machine versus store purchases in most states.

      • Big Mama Pain says:

        This is why I chuckle at people buying bottles of soda at the checkout counter at Walmart. They can save like 40 cents (here anyway) by buying it from a vending machine on the way out.

        • Good Cop Baby Cop says:

          And it will actually be cold.

          What, am I the only one who always seems to get the just restocked and warm bottles?

    • stevied says:

      Well our State is smart enough to have a blanket no-tax on the newspapers. In store or vending.

      Instead the printer pays a tax on the paper consumed.

      (yea, the tax code is weird. the tax is collected on measured feet of production rather than measured feet of paper purchased. This means the publisher has to self pay based upon their distribution rather than paying the tax when the paper is purchased.

      To complicate things, I can buy blank paper from the newspaper publisher (for wrapping paper in my shipments) and there is no sales tax because the publisher has no mechanism for charging sales tax on their reminents of the paper rolls…….. BUT …… if buy the same paper from the paper supply house I must pay sales tax on the paper, because, since I am not a newspaper publisher, I am not exempt from sales tax on blank newsprint.

    • hymie! says:

      Much more likely: if you buy it from the store, you’re paying 50c plus tax; if you buy it from the machine, you’re paying 48c plus tax.

  11. balthisar says:

    In Michigan services aren’t taxed. So if you hire (for example) Home Depot to install your kitchen, those $20,000 of cabinets, countertops, appliances, etc., are also tax free. Do it yourself, and you pay the 6% sales tax.

    • Joseph S Ragman says:

      No … the cabinets are taxed … it’s the labor that is considered the ‘service’, and therefore untaxed.

      • SG-Cleve says:

        Here in Ohio the cabinets and countertops are not taxed if you also purchase installation.

        If what you say is true in Michigan, I would sell the cabinets for free when you pay for installation. There – no taxes.

  12. stevied says:

    A vendor should never be faced with multiple tax rates for similar products

    (subs in VA, KitKat bars etc etc)

    because it only leads to confusion and ….. to be blunt….. CHEATING…. by the consumer and/or the vendor.

    Thankfully my State is smart enough to screw everybody over equally and tax broad groups of products with the same rate…… Food is food, cold, packaged, warm, with sugar or without food is food and therefore it is the same tax rate. Services are services are services and as such are subject to the same tax rate. Simple solution. Of course we get screwed over on the tax rate but at least every item is taxed the same.

  13. GrayMatter says:

    It is not quite as stupid as it sounds. The law states that there are exemptions, so it is either taxed or it is not.

    Unfortunately, the world is gray, not black & white. So, if restaurant food is taxed but groceries are not, the bagel is an example. Whole, it is a grocery item. Slice it while you wait, and you have done food preparation and you must charge. Presliced and packaged, probably grocery.

    Blame it on the real world folks, and not the tax people.

  14. willtarantino says:

    My favorite is in Ohio, I don’t know how many follow this,but it’s the law. Take out coffee is food and therefore not taxable, if you add a sweetner to the coffee, it is now a soft drink and now taxable, but if you add milk or a milk substitute to it, sweetned or non sweetned it is now for once again and non taxable….

    How do donut shops surivive….

    http://tax.ohio.gov/divisions/sales_and_use/documents/streamlined_sales_tax_food_BR.pdf

    • Big Mama Pain says:

      If I remember correctly, Ohio’s tax on eat-in food is universal. So, if you go to a fast food restaurant, you always say that it’s take-out even if it isn’t so you avoid the tax. I worked at a coffee shop there VERY briefly, and it was a nightmare to sort it all out. I usually just never charged tax because it was stupid.

      • SG-Cleve says:

        You can tell who the cheapies are because they’re sitting at a table eating their meal from a takeout bag instead of on a tray.

  15. Swins says:

    Most actually make sense.
    Prepared food v. unprepared on the bagel.
    Belt is an essential, the buckles which are often large and sold separately are jewelry. If you belt comes with a buckle, the buckle is not taxed.
    Cup lids…makes sense.
    Haunted Housed are amusements.
    Tethered hot-air are amusements.

  16. stevenpdx says:

    I’m in Oregon. It’s very simple here. There is no sales tax whatsoever in Oregon.

    • NickelMD says:

      Not surprising from a progressive state, since sales taxes are a regressive tax.

      • zibby says:

        That regressiveness is what makes sales tax so awesome; it’s the only way to collect any tax at all from entire segments of the population.

    • Erik Hughes says:

      Hello, Oregon! Washington here – all we have are sales taxes!

      • Erik Hughes says:

        Actually, living inside WA one the OR border would probably be the best place to live! No state income tax and you could do all your shopping in Oregon.

  17. KyBash says:

    When I worked at a recycling center, we bought scrap plastic from a local manufacturer. Since we sold the scrap after tolling, it wasn’t taxed. But the state considered us the end-user of the boxes it came in, under the theory that they were usable when they came in the door and they went out baled as scrap, so we had to pay sales tax on them. Except for the ones we used for shipping out the processed scrap. And except for the ones in good enough shape that we could sell them.

    Talk about a nitpicking nightmare of bookkeeping!

  18. NickelMD says:

    The belt buckle thing actually seems reasonable. A belt may be a clothing necessity, but a $300 plus buckle is not. (And I shot you not about $300 buckles.)

  19. Ryan says:

    In Minnesota, items of clothing are not taxed. There are exceptions, however, while shoes and other footwear are usually not taxed, one exception ends up working out such that women’s boots (and men’s too, I suppose) that go above the knee are taxed. Boots that are at the knee or below are not taxed. I’m not sure how thigh high boots stop being clothing, but that’s the just the way sales tax works in Minnesota.

  20. Consumeristing says:

    Here’s a link to a California CPA’s answer to a rather simple question whether a tailor has to charge sales tax for his service: http://www.calcpa.org/Content/25604.aspx

    I’m from the government, as much as it warms my heart that some of the lay people here have rationalizations for this kind of useless convoluted idiocy that is the tax code, at the end of the day, these taxes are a PITA to enforce or hardly even makes money for governments.

  21. gman863 says:

    I found my receipt for a pair of Justin leather boots (about as cowboy as you can get) purchased at a major western wear store in Houston about a year ago. Not sure of the error comes from Ruters or Cavander’s Boot City, but I was hit for 8.25% state and local sales tax on the purchase.

    Texas has a high sales tax rate but no state income tax. Although this may sound politically incorrect, this works in Texas’ favor by receiving sales tax revenue from undocumented aliens who often are paid in cash and operate under the IRS or State Revenue Department’s radar.

    The most regressive sales tax system I’ve ever seen is Alabama’s. Tax rates in Mobile are as high as 9% and include everything except prescription drugs. Nailing people for basic food and OTC medicines is wrong.

    • DrLumen says:

      I’m glad you checked because I was thinking I have always paid sales tax on all shoes (including boots). I’m almost positive that I have been charged tax on belts too. I wonder where they are getting their info.

    • MrEvil says:

      I think the law in Texas’ case pertains to what a farmer/rancher can purchase tax-exempt. There’s lots of items and equipment a farmer or rancher can purchase free of sales tax for farm use. A belt and boots are essential work attire for both farmers and ranchers and thus can be purchased tax exempt.

  22. ShadowFalls says:

    I always thought pet food shouldn’t be taxed. At which point is it not a necessity? Sure it is a luxury to have a pet, but once you do, you must feed it. If you do not feed it, that becomes animal abuse and you go to jail.. So how is it not a necessity once you have a pet?

    • gman863 says:

      I agree, especially since most states do exempt other types of animal food related to farming or agriculture. While this may be logical for feeding animals being rasied as a food source (cattle, pigs, etc.) I do not think someone with pet horses deserves a tax break over dog and cat owners.

  23. human_shield says:

    The belt buckle makes a lot of sense. Some of those gaudy buckles are huge and should be sold as jewelery, not clothing.

  24. AnthonyC says:

    Are these sales taxes codified in law, passed by legislatures? Or are they cases law, judgments by courts to settle disputes about whether an existing law requires some entity to pay an existing sales tax?

    That makes an enormous difference in how discussion about these taxes should proceed.