Bloomberg Highlights Tax Foundation Sales Tax Holiday Special Report

July 26, 2010

"U.S. States' Sales-Tax Holidays for School Shopping Derided as 'Gimmicks'"

By Esme E. Deprez

Illinois, Florida and Maryland will offer sales-tax holidays for back-to-school shopping this year, bringing the number of states doing so to 18, even as officials cope with record budget deficits.

The Tax Foundation said in a report today that states implementing tax holidays in 2010 may reach a record-high of 19 if Massachusetts approves a proposed two-day exemption in August for merchandise costing less than $2,500. Sixteen states had sales-tax holidays last year and 17 offered them in 2008, the foundation said.

The tax moratoriums don't prop up economic growth or significantly boost consumption, according to the Washington- based research group. Instead, they alter the timing of purchases.

"Sales-tax holidays are gimmicks designed to win political points for lawmakers," Mark Robyn, who co-wrote the report with Joseph Henchman and Micah Cohen, said in a statement. "If lawmakers want to cut taxes, they should do so in a way that benefits everyone, no matter what they purchase or when they purchase it. Unfortunately, sales-tax holidays only distract from genuine, permanent tax relief."

[Read the full article.]

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