DYK there is a ‘Hot Dog Tax’? Happy National Hot Dog Day!

July 23, 2013 — Leave a comment

Baseball fan? Or a hot dog aficionado like President Obama? As designated by the National Hot Dog and Sausage Council, Happy National Hot Dog Day! More importantly, did you know that a lot of states have a ‘hot dog tax’?

Americans love hot dogs; they spent over $1.7 billion on hot dogs in super markets this past year and that number doesn’t even include those dogs eaten at beloved baseball games. Apparently, fans are expected to eat more than 20 million during this season. Sadly, many aren’t aware of a measly sales tax that makes hot dogs a little more expensive than they should be.

The sales tax remains one of the easiest taxes to manipulate. It’s easy to hide and often, consumers forget that they are even paying a tax.

“[A]n extra half penny or penny in sales tax can bring in millions of dollars in a single year without additional administration. It takes little effort to collect since the burden is on the retailer or vendor and not on the government.”

Additionally, the tax is regressive meaning the tax has one of the widest bases since everyone including the bottom percentile will be most likely paying the tax. This makes it super easy to put a tax on anything especially widely consumed, cheap hot dogs. Once implemented, sales taxes are very unlikely to be amended or repealed.

In 1971, “New York managed to push through a law which imposed a state and city sales tax to restaurant bills that totaled more than a dime and less than a dollar. The price range earned the tax the moniker “hot dog tax” because it boosted the tax on lunches like hot dogs – while exempting breakfasts (at the time, cheaper than a dollar) and pricier meals. In other words, your caviar-laden baguette could have escaped taxation but not the lowly hot dog.”

Don’t worry, then Governor, Nelson Rockefeller, was booted pretty quickly from office. Similarly, a Citizens Committee to Repeal the Hot Dog Tax was formed. The group collected over 1 million signatures, however, officials ignored the petition.

Since then, officials have slightly modified the ‘hot dog tax’. In New York, refrigerated hot dogs are now exempt from the sales tax but if it is heated or served on a bun, it then becomes taxable. Just across the border in Pennsylvania, hot dogs that are ready to be eaten or cooked are tax-exempt. On the other hand, hot dogs in grocery stores and delis are subject to a sales tax.

The following are some more instances of peculiar ‘hot dog taxes’:

In Massachusetts, hot dogs are taxable in stores if served as a hot food and inside convenience stores whether heated or refrigerated (if the store provides a heating unit) and whether or not prepackaged; South Carolina has a similar statute. In California, hot food is generally taxable while cold food is not; the opposite is true for take out drinks where hot drinks are generally taxable and cold drinks are not.

Well if you can get over the ‘hot dog tax’, here’s a list of the best hot dogs in the DC area courtesy of the Washington Post.

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JDKatz: Attorney's At LawJDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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