Hampshire: 365, Massachusetts: 2”). “Current rewards balance” amount may not reflect the most recent transactions occurring within the past 30 business days. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. The South Carolina Department of Revenue (SCDOR) … Tax Day being held in July isn't the only big change for the tax deadline this year.When it was moved from April to July due to the coronavirus pandemic, it came with … For example, scholars Richard Hawkins and the late John Mikesell describe a working-class family that puts off repairing its only car so that it can take advantage of the holiday, or a single, low-income mother who runs up her credit card during the August tax holiday to buy winter coats for her children.[39]. Lawmakers are likely to be under strong political pressure to provide ever expansive exemptions, and businesses are required to track and comply with these year-to-year law changes. A 2018 study from Indiana University later examined this same question, looking specifically at Tennessee. Florida did not codify its 2011 sales tax holiday. The Tax Foundation works hard to provide insightful tax policy analysis. Business inputs, or business-to-business purchases that are used to create other products or services, should be excluded from the sales tax base. The Tax Foundation is the nation’s leading independent tax policy nonprofit. Lawmakers should aim to raise the necessary revenue in the least economically distortionary and destructive way. [29], Virginia’s hurricane preparedness holiday is ostensibly to help consumers stockpile needed supplies, but the list there is arbitrary as well. She took her two daughters to the Bonsack Wal-Mart to scout out school deals, but she planned to wait until the tax-free weekend to buy them.”; In Emilie Bahr, “New Orleans Merchants Hope Sales Tax Holiday Brings Boost,” New Orleans CityBusiness, Aug. 3, 2009: “At The Garden Gate on Old Metairie Road, for example, manager Sara Draper said some customers will select a fancy fountain or bench but wait to swipe their credit cards until they can get the item during the tax-exemption period.”; In Emma Brown, “Shoppers Go For The Gold On Tax Holiday,” The Boston Globe, Aug. 17, 2008: “‘We’re going to come back again tomorrow’ for a stove, said Mariam Haddad of Somerville, who waited until this weekend to buy a crib for her day-care business and a digital camera for her 14-year-old daughter.”. Please find the State Sales Tax Holidays 2020 listed below, and click on your state's website for full details. However, free advertising for what is effectively a 4 to 7 percent discount leads many larger businesses to lobby for the holidays. If the average Canadian family had to pay its taxes up front, it would have worked until May 18 to pay its total tax bill. (Mass. A properly structured sales tax, however, would tax all consumption by end users including services that are currently excluded. [27] South Carolina subjects layaway sales to tax during its holiday. Job creation is a frequent argument in support of sales tax holidays. Published: Nov. 1, 2020 at 12:48 PM PST. www.revenue.alabama.gov/sales-use/sales-tax-holidays, https://tax.iowa.gov/iowas-annual-sales-tax-holiday, https://dor.mo.gov/business/sales/taxholiday/school/, https://tax.ohio.gov/wps/portal/gov/tax/home/news/sales-tax-holiday, www.tn.gov/revenue/taxes/sales-and-use-tax/sales-tax-holiday.html, https://comptroller.texas.gov/taxes/publications/98-490/, www.tax.virginia.gov/virginia-sales-tax-holiday, Your California Privacy Rights/Privacy Policy, Technology: Single purchases $750 or less of computers, computer software and school computer supplies, Clothing accessories or equipment: Less than $50, Select school supplies, school art supplies and instructional materials: No limit, Clothing, footwear and accessories: $60 or less, Computers and accessories: $1,000 or less per item, School supplies: Not to exceed $50 per purchase, School supplies and instructional materials: $20 or less, Computers, computer parts and accessories, printers, ink: No limit, Books and musical instruments: Tax-free if “used for school assignments.”, Computers, tablets, smartphones, televisions, video game consoles: $3,000 or less, School supplies and backpacks: Less than $100. Shoppers Fuming Over Canceled Holiday Tax Relief,” WJLA, July 20, 2009, Sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. In reality, some retailers absorb those benefits themselves. The increased activity during sales tax holidays may be accompanied by the need to hire temporary workers or pay their employees overtime compensation, as previously noted. While the results were not statistically significant, the author argues it is possible retailers actually overshift the benefit of sales tax holidays onto consumers by lowering prices before and during the holidays. 12, 2001): 48-63. But if the shoes are in very high demand, a retailer may have to raise the price to avoid running out of stock too quickly—or may choose to do so because a higher price is now revenue-maximizing. By focusing on encouraging a few days of temporary employment during sales tax holidays, lawmakers lose sight of and undermine policies that promote long-term economic growth and job creation. Using the tax code to discriminate among products can easily translate into discrimination among certain types of consumers, driving sales taxes further from the ideal policy based on the benefit principle. By Kristin McGrath, Contributor Feb. 11, 2020… Such a program would be administratively similar to existing food stamp programs and would only be available to the needy, while avoiding costly tax relief for higher-income consumers. These sales tax holidays, therefore, function as a tax break but do little to shift demand curves. Mass. If the citizens of a state determine that there truly is a legitimate need to help low-income consumers obtain particular products, a more targeted and effective approach could be a rebate or voucher program. [8] Missouri Department of Revenue, “Back to School Sales Tax Holiday – Cities Opting Out,” http://dor.mo.gov/business/sales/taxholiday/school/cities.php (listing cities that opted out of the 2020 state sales tax holiday); in Larayne Brown, “Shoppers throng to state’s sales tax holiday,” The (Jackson, MS) Clarion-Ledger, Aug. 1, 2009: “Kathy Waterbury, spokeswoman for the [Mississippi] State Tax Commission, has gotten reports that some retailers weren’t participating in the event.” However, in most states with sales tax holidays, retailer participation is not optional. Stat. July (2012), Early February, Late February (2018-2020), Clothing, computers, school supplies, books, Clothing, footwear, books, and school supplies (beginning in 2004), End July (2004-2009), Early/Mid August (2010-2020), Clothing, footwear, books, school supplies, and computers, Late March (2002), late July/early August, Clothing, protective equipment, select sports equipment, School supplies, computer software and hardware, graphing calculators, clothing, and footwear (beginning in 2005), Clothing, footwear, computers, school supplies, Personal property items, when purchased from a small business, Clothing, and footwear (beginning in 1998), Clothing, school supplies, instructional material, Mid August (2000, 2001), Mid February (2001, 2002), Clothing, footwear, school supplies, computers, printers, software, various bath supplies, and bed linens, Retail sale of food and drink by restaurants, Batteries, flashlights, storm preparation tools, generators, Mid July (2008), late August (2009), Early March (2010), Early October (2007-2014), Early August (2016-2018), Clothing, footwear, school supplies, computers, educational software, Early September, September-November (2009-2010). Code § 121.6A, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121; Jim Kinney, “Massachusetts tax-free weekend 2018: How, when and where to take advantage of the two-day savings,” MassLive, August 9, 2018, https://expo.masslive.com/news/erry-2018/08/370361fa8b4118/massachusetts-taxfree-weekend.html. Besides the complexities of preparing for the sales tax holiday, businesses will have to deal with a distortion in consumer spending as shoppers shift their buying patterns to coincide with sales tax holidays. [1] Consumption also has the advantage of being relatively easy to track, measure, and tax. "The COVID-19 pandemic has caused immense economic strain on Tennessee families," Gov. [7] Nik DeCosta-Klipa, “There won’t be a sales tax holiday for Massachusetts this year, lawmakers say,” The Boston Globe, July 18, 2016, https://www.boston.com/news/business/2016/07/18/no-sales-tax-holiday-massachusetts-year-lawmakers-decide. Online shopping also is exempt from tax during the days. That … They create complexities for all involved, while inserting the political process into consumer decisions. [26] Virginia’s sales tax holiday permits layaway sales and rain checks, does not permit rebates to lower the sales price, and excludes shipping but includes handling. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. It exempted taxes on clothing, footwear, school supplies, and backpacks priced at less than $100. Tax Code § 151.326, 151.327; Va. Code § 58.1-611.2; W. Va. Code § 11-15-9G; D.C. Code § 47-2005(32A) (Repealed). Sales taxes are a type of consumption tax, or a tax on spending on goods and services purchased by the end user. "The COVID-19 pandemic has caused immense economic strain on Tennessee families," Gov. Which includes children, teachers, and staff getting regularly tested. Different locations face different levels of risk. People may want to spend money on travel, restaurants, or related industries, but are unable to do so safely right now. Rather than providing a valuable tax cut or a boost to the economy, sales tax holidays impose serious costs on consumers and businesses without providing offsetting benefits. [13] See in Mary Worrell, “Sales Tax Holiday A Bust For Some Retailers,” Hampton Roads (Va.) Business Journal, Aug. 13, 2007: “Zenisek spent money advertising the tax-free weekend in area publications and had more employees in-store anticipating an influx of traffic, which she never saw.”; In Mark Albright, “Sales Tax Holiday’s Appeal May Be Slipping,” Tampa Bay Times, Aug. 2, 2007: “‘I’m done,’ proclaimed the Largo nurse and mother of three during a recent outing at Target. See Jonathan Williams, “New Hampshire’s 365-Day Sales Tax Holiday,” Tax Foundation, Aug. 8, 2006, https://taxfoundation.org/new-hampshires-365-day-sales-tax-holiday-0/. [3] In 2020, 15 states will hold clothing sales tax holidays, 11 states will have school supplies sales tax holidays, six states will have computer sales tax holidays, and four states will have Energy Star products sales tax holidays. It’s worth noting that most states prohibit stores from advertising that they will pay the sales tax on a purchase for the consumer; during a sales tax holiday, however, what is normally prohibited becomes mandatory. https://www.dor.ms.gov/Business/Documents/2019%20Sales%20Tax%20Holiday.pdf. For others, it might be wiser to wait until after the holiday. [34] See Pat Hatfield, “The Mystery of Florida’s Vanishing Sales Tax Holiday,” The Deland-Deltona (FL) Beacon, July 8, 2008. Beware: If you show up for it on Sunday, you'll miss out. Florida alternated from having a holiday, not having one, and now having one again. 68, § 1357.10; 72 Pa. Cons. In 2020, 16 states will conduct sales tax holidays, down from a peak of 19 in 2010 and unchanged since last year (see Table 1). Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence (including a 2017 study by Federal Reserve researchers) shows that they simply shift the timing of purchases. While sales tax holidays are often defended on grounds of economic benefits, in reality, a key motivation has been attempting to stop cross-border shopping, and perhaps even lure shoppers from other states. See Ann Zimmerman, “Retailers Want In on Stimulus Plan,” The Wall Street Journal, Dec. 24, 2008. Target's teacher discount is coming back: Here's how educators, including home-school teachers, can save 15%. In Massachusetts, there is no sales tax on clothes less than $175 year round. Code § 27-65-111(Bb); Mo. They found that retailers absorbed up to 20 percent of the benefit of a sales tax holiday, significantly reducing the benefit that consumers received. From the perspective of a business trying to operate at maximum efficiency, the extra administrative and labor costs associated with a sales tax holiday are an unjustifiable burden, considering the unlikelihood that sales tax holidays increase overall sales. Narrowing the tax base, by contrast, will likely lead to higher and more damaging taxes elsewhere. (For example, it may not be the best idea to wait until the weekend before school begins to buy school supplies.) Otherwise, final products will be taxed multiple times: once (or more) during production and again when purchased by the end user. Sales tax holidays have enjoyed political success, but recently, policymakers have been reevaluating them. When lawmakers create sales tax holidays, the assumption is that the benefit will be passed on to consumers in the form of lower prices. 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