Any jeweler will tell you that the run-up to Valentine’s Day is the season for selling engagement rings. However, if you’re planning to spend a few thousand dollars (or more) on a ring, and you live somewhere along the New York City — Washington, D.C. corridor, why not buy the ring in tax-free Delaware?
A ring purchased in New York City or in nearby Long Island City is subject to a whopping 8.875 percent sales tax. For a $3,000 ring, that’s $266 in sales tax. It’s a combination of New York’s state sales tax and the City’s tax.
In nearby Nassau County (on Long Island) it’s 8.625 percent.
A ring purchased in suburban Westchester County, NY is subject to a total sales tax of 7.37 percent.
New Jersey’s sales tax is 6.625 percent; localities cannot add on a tax. For the $3,000 ring, it’s nearly $200.
Pennsylvania’s sales tax differs by county and city. In Philadelphia, it’s 8 percent. However, in Bethlehem (due west from New York City), it drops to 6 percent. Thus, a $3,000 will incur a $240 sales tax in Philadelphia; it drops to $180 in Bethlehem.
Maryland’s sales tax is 6 percent; localities cannot impose an additional tax. Ergo, its tax on that ring will be $180. Washington, DC also has a 6 percent sales tax.
Ring buyers should ask themselves if it’s worth driving to Delaware for a tax-free ring. If you’re going for big bling, you might consider it.
The ring-sales tax issue also is a simple example of how states and cities sock it to their consumers, and how some consumers vote with their feet, or in this case, their SUVs.
As a Wilmington resident who hates crowds, I avoid the membership big-box stores from Thanksgiving through the Super Bowl (the latter stimulates purchase of big-screen televisions and beer).
The parking lots tells the story. They’re full of SUVs with NJ and PA license plates. Plus, the DE big box stores sell wine and beer for much lower prices than in the neighboring states – because there’s no sales tax on those items either.
Of course, before heading to Delaware, one needs to estimate the mileage and tolls involved.
However, there are a few more factors that might offset the travel costs.
First, Costco and BJ’s have locations near Wilmington. It’s worth thinking about if you’re planning on making another large purchase (e.g., laptop, big-screen television), or you want to stock up on a year’s worth of toilet paper.
Also near Wilmington is a high-end mall (Christiana Mall) with a Nordstrom’s — in case the bride is a fashionista, and wants to splurge on shoes — they’re also tax-free in Delaware.
The city also boats a real Little Italy neighborhood packed with restaurants. Doggie bags are “de rigueur.”
Or (if you’re heading north on I-95) you could simply grab a true Philadelphia cheesesteak sandwich. And, for your information, I prefer Tony Luke’s.
Finally, be sure to fill up your gas tank while in Delaware — gasoline is cheaper too since New Jersey raised its tax on gasoline. The Garden State once was famous for cheap gas, but no longer.
For fiscal conservatives in the I-95 corridor who are going for the big engagement bling, Delaware is your destination for a tax-free Valentine’s Day!
Joanne Butler was an international trade specialist at the Office of the U.S. Trade Representative and at the Foreign Agricultural Service at USDA in the George H.W. Bush administration. In the George W. Bush administration, she was a senior adviser and speechwriter at the Department of Labor.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.