Sales Tax in New York

The US Constitution limits the power of New York State to tax.  Congress has the exclusive power to regulate foreign and interstate commerce.  A federal law regulating interstate commerce must regulate the:  (1) channels of interstate commerce, (2)  instrumentalities of interstate commerce, or (3) activities that have a substantial effect on interstate commerce.

The US Constitution and federal laws made pursuant to it are the supreme laws of the land and may either expressly or impliedly preempts local laws.  A federal law impliedly preempts a statute if (1) federal and state laws are mutually exclusive, (2) state law impedes the objectives of federal law, or (3) Congress evidences a clear intent to preempt the field.

Sometimes Congress uses its taxing authority to incent states to implement certain laws such as seatbelt laws, though under the US Constitution 10th Amendment, Congress cannot compel states to implement specific state legislation.  Under the 10th Amendment, powers not granted to the federal government or prohibited to the states by the US Constitution are reserved to the states.  Congress incents states with its taxing power to implement laws by conditioning funding on the implementation. This way, if the state does not implement the laws Congress wants, the does not get federal funding.

According to Wikipedia on “Sales taxes in the United States”, though Congress has taxing powers, New York is able to tax as long as the laws do not conflict with federal laws.  New York has a 4% state sales tax.  All New York counties and some cities add local taxes on top of the state sales tax, ranging from 3% to 4.75%. For example, the combined sales tax in New York City is 8.875%.

The sales taxes depend on what a person purchases.  As of September 1, 2007, New York State got rid of the sales tax on clothing and shoes if the single item is priced under $110, but local sales taxes may still apply. Governments may use taxes to condition behavior, not just to raise money.  For example, New York State monitors online purchases with a tax based on where goods are shipped.

A resident of a state with a sales tax who buys goods from a place with no sales tax or a sales tax at a lower rate may be subject to pay a use tax at the same rate as the state sales tax, unless the shopping is tax-free like on an airplane.