A tax loophole for bagels: An NYC company added another, inner bagel hole
AILSA CHANG, HOST:
It is tax day. But, of course, we don't just pay taxes once a year, right? There's sales tax. There's also the sandwich tax. That's a tax people in some states, like California, Massachusetts and New York, pay for prepared foods. And one company found a tax loophole for a New York delicacy. NPR's Stacey Vanek Smith reports.
STACEY VANEK SMITH, BYLINE: Here in New York, a lot of things are legally considered sandwiches. And if you buy them, you have to pay a sandwich tax. A wrap? Technically a sandwich. A hot dog? That's a sandwich. A burrito? Somehow also a sandwich. A bagel? If you slice it and throw some cream cheese on it, it's a sandwich.
RYAN KLEPPER: Sandwich tax - 8.875%.
VANEK SMITH: Ryan Klepper is the director of restaurant operations for H&H Bagels. I met him at an H&H inside of New York's bustling Penn Station. He says that 8.875% adds up.
KLEPPER: I believe on a bagel with cream cheese is $4.10. And I'm not a mathematician, but I believe the tax is $0.36.
VANEK SMITH: Grand total - $4.46, all because of a Depression-era measure meant to keep taxes off of groceries but charge extra for restaurant food. Now, if you order just a bagel at H&H, not sliced, no cream cheese, you do not pay the sandwich tax. And this got H&H thinking, is there a way to give people a bagel with cream cheese that does not involve that bagel getting sliced open?
KLEPPER: If we filled the bagel with cream cheese, it could be not subject to the tax.
VANEK SMITH: Like, injected it in.
KLEPPER: Injected it in. It's a lot similar to how they would fill a Boston cream or a jelly doughnut.
VANEK SMITH: Behold the tax-free bagel, brought to you by H&H Bagels and Philadelphia cream cheese. No slicing, no schmearing, no sandwich tax. Total cost - $1.90.
Did you get a tax-free bagel?
JONATHAN GOULD: I got a tax-free bagel.
VANEK SMITH: What made you - what inspired you to get it?
GOULD: I like the rebellion, OK? I like the rebellion.
VANEK SMITH: Jonathan Gould (ph) had just gotten off the train from New Jersey.
Would you mind giving it a try and telling me what you think?
(SOUNDBITE OF WRAPPER CRINKLING)
GOULD: It's good. I mean, it's good for what the purpose of it is.
VANEK SMITH: So what out of 10 would you say?
GOULD: Oh, I don't like to rate things. This doesn't have the flavor. It's just, like, doughy. I don't know. You know, three-ish.
VANEK SMITH: Oh, OK.
GOULD: Yeah, three-ish. I think any serious New Yorker who knows bagels, this is on the lower end of the bagel scale.
VANEK SMITH: But on a rebellion scale, 10 out of 10. Happy tax day.
Stacey Vanek Smith, NPR News.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.