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 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

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.