Bruegger’s Bagels customers in New York State face an additional charge if they take their bagels out sliced, with cream cheese on top, or if they eat them on the premises. New York State, essentially broke, is enforcing a little-noticed law that distinguishes between essential food items and luxuries. A bagel sliced and topped with cream cheese immediately becomes a luxury item, subject to a seven cent tax.
The owner of the franchise, which sells bagels in 33 locations across New York, was audited by the State tax authorities and handed a fine and ordered to start to collect. To show that he was not charging customers for cutting their bagels, he put up signs in the stores.