on items of clothing and footware priced under $100 by 2000 (Wilson, 1997). That was not good enough for Giuliani, who stepped up the pressure to increase the tax threshold to $500 and make the change effective earlier. Giuliani got a new test of the idea from the State of New York in January 1998 (Solnik, 1998). Later, the state and the city agreed to increase the tax threshold to $500, while leaving the effective date of the change at 1 January 2000.
Supporting and Opposing Positions on the Issue
Supporters of the change in the sales tax law applying to items of clothing and footware priced under $500 argue that the change will generate increased sales, which, in turn, will increase employment levels. They argue further that increased sales will generate increased profits and personal income that will translate into higher income tax collections that will neutralize any revenue losses accruing from the elimination of the sales tax (Friedman & Larson, 1997).
Opponents of the change in the sales tax law applying to items of clothing and footware priced under $500 argue that the change will depress state and city government revenues much more than any increase in such government revenues that will be generated by higher profits and personal income levels. Further, the opponents of the change contend that New York retailers would not reap a great benefit from the change in the sales tax (Picard & Moin, 1998).
Assessing the Change in the Sales Tax
The change in the sales tax is assessed within the context of four factors. These factors are equity, administrative ease, political implications, economic impact, and revenue adequacy.
Assessment Within the Context of Equity
When the change in the sales tax applied to items of clothing and footware p
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