Conservatively Speaking

No sales tax holiday in Wisconsin

Posted by Mary Lazich on Aug. 2, 2010

Taxes, Economy

 
Soon it will be back to school.

That means sales on clothes and supplies, and 16 states have a back to school sales tax holiday. Eighteen states utilize some form of sales tax holiday. Wisconsin is one of 32 states without the marketing ploy and that might be in our favor. While retailers love the concept, evidence suggests the limited, temporary tax break is ineffective. 

Stateline.org reports, “Louisiana and South Carolina kick off hunting season with a tax break on guns. Louisiana and Virginia begin hurricane season with a tax break on preparedness items such as flashlights, batteries and generators. And six states, including Maryland, Missouri and West Virginia, offer temporary sales tax breaks on Energy Star appliances.”

Come August, sales taxes for a brief time are forgiven on items like pencils, notepads, even computers. Budget crisis infested Illinois welcomes their new sales tax holiday. However, Georgia decided to drop its tax break this year.

Two organizations, The Tax Foundation in Washington D.C. and the liberal Citizens for Tax Justice, according to Stateline.org concur on sales tax holidays: “Since the holidays only include special items — school items during back-to-school season, guns and ammunition during hunting season — they still unfairly impose sales taxes on everything else. In other words, they discriminate against consumers who don’t go hunting every fall and don’t have to buy their children notebooks and pencils.”

The Tax Foundation has just issued a new report on the impact of sales tax holidays. Their conclusion: Bad policy that sounds good. The report states:

“Despite their political popularity, sales tax holidays are based on poor tax policy and distract policymakers and taxpayers from real, permanent, and economically beneficial tax reform. Sales tax holidays introduce unjustifi­able government distortions into the economy without providing any significant boost to the economy. They represent a real cost for busi­nesses without providing substantial benefits. They are also an inefficient means of helping low-income consumers and an ineffective means of providing savings to consumers. Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings."  

Well...I say,The Tax Foundation and the liberal Citizens for Tax Justice can cry me a river.  The vast majority of my constituents appreciate any tax break they can get.  A sales tax holiday is a more worthy stimulus that the stimulus Washington D.C. recently provided.   I do agree that sales tax holidays "still unfairly impose sales taxes on everything else".  Maybe we should eliminate the unfairly imposed sales tax on everything else, rather than use it as a justification not to enjoy a sales tax holiday.

Read more from Stateline and the Tax Foundation.