Taxes: The Scariest Thing on Halloween?

September 30, 2005

The never ending parade of sales tax exemptions moved in to New Jersey and has found a way to complicate Halloween of all things. From Newsday.com:

Just in time for Halloween, sales tax is being removed from Twix bars, Tootsie Rolls and those itchy store-bought Halloween costumes.

New rules bringing New Jersey’s sales taxes in line with other states go into effect Saturday, said Tom Vincz, spokesman for the New Jersey Department of the Treasury.

The changes are designed to smooth operations for businesses with multistate trade so that say, a single-serving bottle of iced tea or dandruff shampoo is taxed similarly in several states. New Jersey will join about 20 other states that have signed onto the Streamlined Sales and Use Tax Agreement.

Among the changes, the Department of Taxation’s officials say, is one in which sweets made with flour _ such as licorice, KitKats and Nestle’s Crunch, will be exempt from tax, while those prepared without flour _ Hershey’s chocolate bars, for example _ remains subject to New Jersey’s 6 percent sales tax.

We at the Tax Foundation are all for making the sales tax code uniform across states as this cuts down on uncertainty and complexity, but what is the rationale behind taxing one candy and not another?

Robert Frank of the New York Times told us yesterday that children learn best through story telling. Maybe the best way to teach children about poor tax policy is to tell them about the scary tax man who wishes to complicate their Halloween fun by taxing their snickers bars but not their twix bars.


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