Philadelphia Cream Cheese Is Going After New York's Bagel Tax

New York City is famous for its bagels; bakeries across the boroughs have been boiling and baking up bagels for over two centuries. The Big Apple is also known for strong opinions stated (or yelled) loudly, including on where to find the best and most authentic bagels in the city. Though New Yorkers might never be able to agree on that point, one thing they can come together on is a shared resentment of the state's bagel tax. It adds an extra eight cents to the cost of each one, whether that bagel is spread with cream cheese or used to build a sandwich. Philadelphia Cream Cheese is jumping into the fray on this contentious issue, by giving New Yorkers a chance to say "Get stuffed!" to the tax man.

In a statement, parent company Kraft Heinz announced that Philadelphia Cream Cheese will partner with NYC-based H&H Bagels to offer a special treat in honor of next week's Tax Day. From the outside, the Tax-Free Bagel looks like a regular, unsliced bagel, however, a bite reveals that it's stuffed with a filling of cream cheese. The company says that because the bagel is sold whole, it can skirt the eight-cent tax. It's a small, limited-time victory, but a victory nonetheless — well, hopefully.

The New York Times shares that though it was technically on the books, the bagel tax was largely ignored until a little over a decade ago when the state decided to get serious about collecting it. The tax only applies to bagels meant to be served on the premises or prepared to be eaten right away — slicing a bagel, even if left plain, is all it takes to make it taxable. The state sees whole bagels as destined for home consumption, so they aren't taxed. The chain Bruegger's Bagels found out about this the hard way after their New York locations were audited in 2010 and penalized for not collecting the tax. 

Philadelphia Cream Cheese and H&H Bagels say their Tax-Free Bagels circumvent the bagel tax because they're unsliced, with the schmear hidden inside. However, since the state of New York (in a bulletin) defines taxable food as "prepared by the seller and ready to be eaten," it's possible that the companies have only dodged the tax law in spirit rather than reality. 

Since the promotion is only a few days long, these brands may just get away with it, and their customers will get to rebel, keeping that eight cents in their pockets. The Tax-Free Bagels will be available at Manhattan-based H&H Bagel shops and can also be ordered on their website for delivery across the country. The promotion runs from Friday, April 14 through Tax Day on Tuesday, April 18.