Taxes on sliced bagels? In our last issue, we noted that New York State, pressed to raise revenue, increased the sales tax on cigarettes to the dismay of smokers. In this issue, we note that The Wall Street Journal reported that New York State has begun to enforce one of the more obscure state tax laws on bagel franchises to the dismay of bagel aficionados. Apparently, bagels sold and sliced on premises or eaten on premises are subject to New York State sales tax, while whole bagels sold and consumed off premises are not. See Jacob Gershman, “Sliced Bagels, Taxes on Top,” WSJ Online, August 24, 2010.

Congress will not vote on tax cuts until after the election. The Bush-era tax cuts expire at the end of the 2011, significantly raising tax rates on wages, capital gains, and dividends to the 2001 levels. (For a FAQ on the expiring Bush-era tax cuts, including a list of what is to expire, see “Frequently Asked Questions on the Expiring Bush-Era Tax Cuts” by the Tax Foundation, available at The current administration has stated it intends to keep the Bush tax cuts for the middle class, let the Bush tax cuts expire for high income earners ($200,000 in the case of single filers, and $250,000 in the case of joint filers), and generally tax qualifying dividends and capital gains at a maximum rate of 20%. Opponents seek to keep the Bush tax cuts in place for everyone, including high income earners, arguing that a tax increase in the current economy will stifle economic growth. It will be interesting to see, after the elections, to what extent and in what form the Bush tax cuts remain.