New York City Sales Tax on Clothing

The City of New York and the State of New York have cooperated to enact legislation to eliminate the sales tax on all articles clothing that are priced at less than $500. The change in the sales tax laws will become effective 1 January 2000.

This research examines the derivation of this change in the sales tax on clothing in New York, together with the arguments for and against the change. Additionally, the sales tax change is assessed within the contexts of equity, administrative ease, political implications, economic impact, and revenue adequacy.

Derivation of the Change in the Sales Tax on Clothing

The argument that lower taxes leads to higher levels of economic activity has been going on since taxes were first imposed. After these eons of time, however, proponents and opponents of the argument still are able to cite figures (not necessarily hard data) supporting their own positions. New York City, however, is in a somewhat unique position with respect to the impact of sales taxes. With 37 percent of a massive metropolitan area population residing more or less centrally in the region, high sales taxes imposed within the city can be avoided easily by the residents of the city by simply shopping across the state line in a lower-tax area·primarily New Jersey.

New York City Mayor Rudolph Giuliani has been pressuring the State of New York to eliminate or reduce the sales tax since his election to the post.

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assure that those individuals within a population with higher levels of disposable income continue to pay a greater share of their income in taxes than that share paid by individuals with lower levels of disposable income. The change in the combined State of New York and City of New York sales tax on items of clothing and footware priced under $500 will be equitable both horizontally and vertically. The elimination of the sales tax on items of clothing and footware priced under $500 will be of greater benefit to individuals in lower disposable income brackets than to individuals in higher disposable income brackets; however, the magnitude of these benefits will not be sufficient (1) to create any change in the ranking hierarchy of disposable income or (2) to cause any deterioration in the progressivity of the sales tax applied to clothing and footware. In the case of horizontal equity, the sales tax change may be expected to have no impact, while in the case of vertical equity, the sales tax change may be expected to improve the vertical equity dimension of the sales tax on clothing and footware. Assessment Within the Context of Administrative Ease Within the context of the assessment of the change in the combined State of Ne
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Some common words found in the essay are:
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Approximate Word count = 2030
Approximate Pages = 8 (250 words per page)

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