Many people are beginning to wrap their minds around the House Republicans’ proposed destination-based cash-flow tax and what it means for tax reform. Most people are still looking into the tax’s impacts on trade and how...
- The Tax Policy Blog
- Happy July 2! 14 States Exempt Flags from Their Sales Taxes
Happy July 2! 14 States Exempt Flags from Their Sales Taxes
We missed Flag Day this year, which we've honored in past years by providing information about which states exempt flags from their sales taxes. Flag Day is the anniversary of when 19-year-old Wisconsin teacher Bernard J. Cigrand asked his students to write essays on the U.S. flag and its significance. This fell on the anniversary of the Continental Congress's vote in 1777 to adopt the Stars and Stripes, and since 1949, Flag Day has been honored every June 14. But because we missed it then, we're providing the data today, on July 2, the day the Second Continental Congress of the United Colonies formally voted for independence from Great Britain.
There are 14 states that exempt the purchase of U.S. or their state's flags from their sales tax. Such an exemption is poor tax policy: states have exempted nearly 60% of consumer sales from sales tax (more than half), often for political reasons. At the same time, many business inputs are subject to tax, meaning that some retail items are taxed multiple times and some (like flags in 14 states) not at all. This micromanagement of consumer decisions disrupts what would otherwise be decisions made on economic factors, not tax incentives or government prodding.
Take West Virginia, for instance. Their exemption for flags is the 49th item in a lengthy list of exemptions. In Vermont, it's merely the 33rd, but they throw in the wrinkle that it's only exempt if sold to (or by) a veteran's organization. Another reminder to keep by the register of Vermont flag vendors.
Here's the full list:
States That Exempt U.S. and State Flags From Sales Tax
|California||If sold by a nonprofit veterans organization||Cal. Rev. & T. Code § 6359.3|
|Connecticut||Exempt||Conn. Gen. Stat. § 12-412(23)|
|Florida||Exempt||Fla. Stat. § 212.08(7)(f)|
|Maryland||Exempt||Md. Code, Tax General § 11-205|
|Massachusetts||Exempt||Mass. Gen. Laws ch. 64H § 6(w)|
|New Jersey||Exempt||N.J. Stat. 54:32B-8.26|
|New York||Exempt||N.Y. Tax Law § 1115(a)(11)|
|Pennsylvania||Exempt||72 Pa. Stat. § 7204(32)|
|Rhode Island||Exempt||R.I. Gen. Laws § 44-18-30(34)|
|Tennessee||If sold by a nonprofit organization||Tenn. Code § 67-6-329|
|Vermont||If sold by or to tax-exempt veterans' organization||Vt. Stat. tit. 32, § 9741(33)|
|Virginia||If sold by government agency||Va. Code § 58.1-609.1|
|West Virginia||Exempt||W. Va. Code § 11-15-9(a)(49)|
|Wisconsin||Exempt||Wis. Stat. § 77.54(46)|
Source: Tax Foundation
Enjoy the Independence Day weekend!
Follow Lyman on Twitter.
Note: This is a republication of a blog post we published in 2011. We did not find evidence of any changes in state sales tax exemptions for flags since then.
Get Email Updates from the Tax Foundation
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.