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Friday, November 26, 2004


City loses billions in sales taxes

November 26, 2004
New York Newsday

Many local shoppers know what they're getting when they buy a designer handbag or compact disc for a fraction of the typical cost: a knockoff. It's too bad that New York City gets stiffed in the process to the tune of more than $1 billion annually in lost sales tax revenue. The city is strapped for cash, so the comptroller's recommendations for stemming the losses are a good place to renew the fight against counterfeiters.

William Thompson estimates that $23 billion worth of counterfeit goods were sold in New York last year. First of all, it's illegal. He points out that bootleggers are a priority for local law enforcement, but that they are nimble and often elusive adversaries. It doesn't help when their customers are willing participants in the crime, whether on the street or in offices.

That's why the comptroller suggests efforts to increase public awareness and education, especially for the benefit of people who really believe that a genuine Coach bag can cost less than $50. Thompson also called for the creation of an industry task force and more resources for enforcement from state and federal governments. Contrary to the perception, this is hardly a victimless crime. Just ask the residents who depend, for example, on inadequately funded schools.

Want a glance into the mind of the Liberal mentality? It's right here in front of you. New York Newsday trades off with the New York Times for the title periodially. With this entry , advantage NewsDay.

Only a Leftist could take an obvious crime and, somehow make the focus of the article the inability of New York City to siphon tax dollars as a result. In other words, the editor's view is not about those individuals who come to the city and are ripped off by a retail store that misrepresents their products as designer wares when they are knockoffs. Newsday doesn't focus on the various designers who have their product ripped off in violation of patent or trademark.

No, the editor of the New York Newsday thinks the real travesty is that the City of New York, and the State of New York don't get to dip into the accompanying sales taxes that would be significantly higher if the real items were being purchased, and not the less expensive knockoff.

Of the $23 Billion in knockoff goods highlighted in the article, there is an estimated $1 Billion in lost taxes. This translates to over 100% of the 4.25% sales tax applied to the $23 Billion. We know those are faulty numbers because a significant number of low scale boutiques do, indeed, sell knockoffs. They do it in broad daylight. And, they attach sales tax to those purchases. These are revenues that the City and State wouldn't see but for the fraud of retailers.

Travesty? Not really. Anyone who snoozed through an Economics 101 class can tell you about demographics. Those folks only willing to shell out $50 on a knockoff Fendi Selleria Sport bag are not going to be in the same consumer tier of those who want the real thing for $2,400.00. And, those who can afford the real thing aren't going to purchase a knockoff. Somewhere in between are those individuals who might do one or the other. However, from a purely economical perspective, the existence of knockoffs in New York City retail stores increases the consumer base, and then expands the resulting revenue base. New York City, and New York State set their tax rates based on sales. So, actually, knockoffs increase the perverted tax coffers of both government entities.

Ethically? Well, that's a different story. The retail stores are breaking the law on a number of different levels and statutes. Consumers who know they are buying knockoffs, arguably, are breaking the law as well. Those derelicts selling fake Rolex Watches in Battery Park are breaking about 8 separate laws. They should all face the force of the law in all capacities.

Despite our Liberal editor's claim that the New York Public School System suffers as a result of retailers selling knockoffs....that's just not the case. The editor is going to have to look somewhere else to place the blame...for example how about wasting money on diversity programs, sensetivity issues, and materials that don't touch on those "outdated" concepts of reading, writing, and arithmetic? The NYC Comptroller wants more resources "for the creation of an industry task force and more resources for enforcement from state and federal governments." Cha-Ching...It's called justifying the annual NYC law enforcement budget.

Perhaps the editor is a product of the New York Public School System. In that case I suppose we should let him off the hook...

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