Happy Flag Day! 14 States Exempt Flags from Their Sales Taxes

Today is Flag Day, 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.

To accompany today’s theme, we note that 14 states exempt the purchase of U.S. or their state’s flags from their sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. . Such an exemption is poor taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. 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

STATE	STATUS	CITATION
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

Happy Flag Day!

More on sales taxes here.

Note: This is a republication of a blog post we did for Flag Day 2010. Although it is unlikely, some states may have changed their laws in the past year.

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