Two 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. proposals are under consideration in Florida: a vastly expanded tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. for film productions, and an annual “back-to-school” sales tax holidayA sales tax holiday is a period of time when selected goods are exempted from state (and sometimes local) sales taxes. Such holidays have become an annual event in many states, with exemptions for such targeted products as back-to-school supplies, clothing, computers, hurricane preparedness supplies, and more. . Both types of policies have experienced growing popularity in state legislatures in recent years because they supposedly provide a boost to the economy and provide jobs, but the truth is much less impressive. Our Fiscal Fact No. 210, “Florida’s Sales Tax Holiday and Film Tax Credit Proposals Will Not Deliver on Exaggerated Promises,” lays out the case against these proposals that turn out to be more hype than helpful, and may even be damaging to the state’s economy.
If lawmakers in the Sunshine state want to cut taxes they should pass broad-based tax cuts that do not favor the politically connected or discriminate between taxpayers based on what they buy or when they buy it.
For even more information on 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. holidays check out this section of our site dedicated to the topic, and Tax Foundation Special Report No. 171: Sales Tax Holidays: Politically Expedient but Poor Tax Policy.
For more on film tax credits see here and Special Report No. 173: Movie Production Incentives: Blockbuster Support for Lackluster Policy.
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