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Sales Tax Holiday - Good Policy or Gimmick

Sales Tax Holiday – Good Policy or Gimmick

The Wisconsin State legislature is considering introducing a bill to create a sales tax holiday.  The sales tax holiday would take place over two weekends a year.  One holiday would have a focus on back-to-school supplies and a second would focus on energy efficient appliances.  Several States have holidays like this and some will make the argument that these holidays are revenue neutral because a person enticed to shop for some of the products the holiday might apply to might buy a few additional products that would still be subject to the sales tax.

My opinion is that this is not good tax policy and is a gimmick.  This is not the type of policy that is going to encourage an employer to hire additional people.  I don’t even think this is something that will stimulate more consumer activity.  One way or the other I have to by school supplies for my child and all I can see this possibly doing is maybe changing the weekend I purchase them.  I certainly am not going to rush out and buy a new dishwasher to replace once that functions simply because I wouldn’t have to pay sales tax one weekend.

There are lot of things the State could do to modify the tax code and stimulate the economy and we’ve highlighted some of them here.

The other problem is that like most tax policy this one decides who gets some benefit and those who will see no impact at all. 

This is not something that does anything other than get some publicity for a few legislators.