In a city that never sleeps, it’s astonishing that some businesses—ranging from pizzerias to high-end restaurants—still operate entirely on cash. While this might seem like a minor inconvenience to customers, it raises a far bigger issue: tax evasion and lost revenue for New York City and the state.
New York has pushed aggressive policies to generate more tax revenue, including congestion pricing, increased tolls, and higher property taxes. But instead of nickel-and-diming everyday New Yorkers, why not close an obvious loophole? All businesses should be required to accept credit and debit cards—even for a $1 purchase.
The Tax Evasion Loophole in Cash-Only Businesses
The reality is simple: Cash makes it easy to hide income. A business that only takes cash has complete control over what it reports in revenue. With no digital record of transactions, it can underreport earnings, skim profits, and avoid paying its fair share of taxes.
Meanwhile, businesses that do accept credit cards automatically report income, pay the proper taxes, and play by the rules. But the cash-only operators? They benefit from the same city infrastructure—roads, police, sanitation—without contributing their fair share.
Mandating Card Payments: A Smarter Way to Increase Tax Revenue
Instead of imposing new taxes and fees on everyone, Governor Kathy Hochul and NYC officials could increase tax compliance without punishing law-abiding citizens. Here’s how:
- Make it a legal requirement for all businesses to accept credit, debit, or mobile payments.
- Give small businesses a transition period (3-6 months) to set up digital payment systems.
- Offer tax credits to offset credit card processing fees for mom-and-pop shops.
- Enforce compliance with surprise audits and significant fines for non-compliant businesses.
This isn’t a radical idea—cities like Philadelphia and San Francisco have already banned cash-only businesses. Even Massachusetts has had a law since 1978 requiring businesses to accept cards. New York should follow suit.
The Pushback: What About Small Businesses?
The primary argument against this policy is credit card processing fees, which range from 1-3% per transaction. But businesses already have ways to offset these costs, such as:
- Passing fees to customers (as long as it’s disclosed).
- Setting a minimum card purchase amount ($5 or $10).
- Using mobile payment apps with lower fees.
If a small business truly can’t handle a 1-3% fee, it raises the question: Are they operating with such slim margins, or are they benefitting from cash transactions staying off the books?
Time for NYC to Modernize and Close the Loophole
New York City claims it needs billions of dollars in new revenue, yet it allows a massive tax loophole to persist.
If state and city officials are serious about increasing revenue without hammering middle-class residents with new fees, they need to modernize commerce. Requiring all businesses to accept card payments is a simple, effective solution.
It’s time for NYC to stop punishing everyday workers and drivers with congestion pricing and property tax hikes while letting cash-only businesses get a free pass. The era of cash-only tax dodging needs to end.
Disclaimer: This article is an opinion piece intended for informational and discussion purposes only. The views expressed are those of the author and do not constitute legal, financial, or tax advice. This article does not accuse any individual, business, or entity of wrongdoing but rather explores potential concerns and implications of cash-only business practices. Readers should conduct their own research and consult with qualified professionals before forming any conclusions or taking any action related to business practices, taxation, or regulatory compliance. The author and publisher disclaim any liability for errors, omissions, or any consequences arising from the use of the information provided.
