August 14, 2013

Daily Hampshire Gazette: Tax-free weekends are bad economic policy and send wrong message

media mention

 

(Published in print: Monday, August 12, 2013)
To the editor:
It troubles me that we marched on to last weekend’s “tax-free holiday” with so little thinking about the folly and hypocrisies of such a “gift” from the Legislature.
Studies repeatedly show that very little additional retail spending results from these holidays (Institute on Taxation and Economic Policy, 2012; Tax Foundation, 2013).
Rather, folks mostly buy the same items they would have anyway, but a few weeks or months earlier or later than they would have otherwise. The net result is very little additional activity for businesses. The real outcome is a reduction in badly needed state revenue, to the tune of $23 million (the estimate for Massachusetts’ 2012 “tax holiday” tax losses), forcing a scramble to make up the loss through even more service and infrastructure cuts or further reliance on already regressive taxes.
It seems nuts to me to raise our regressive sales tax from 5 to 6.25 percent on the one hand (as we did in 2009) and to suffer through continuing decreases in local aid from the state (forcing communities to make the painful choice of placing divisive override measures on the ballot), while at the same time we appear to take delight in shopping “tax-free” for a weekend.
The especially unfortunate outcome of this short-sighted public policy is further reinforcement of the notion that taxes — the price we pay to be in community with one another — are loathsome and to be avoided whenever the opportunity presents itself.

Tuesday, August 13, 2013

(Published in print: Monday, August 12, 2013)

To the editor:

It troubles me that we marched on to last weekend’s “tax-free holiday” with so little thinking about the folly and hypocrisies of such a “gift” from the Legislature.

Studies repeatedly show that very little additional retail spending results from these holidays (Institute on Taxation and Economic Policy, 2012; Tax Foundation, 2013).

Rather, folks mostly buy the same items they would have anyway, but a few weeks or months earlier or later than they would have otherwise. The net result is very little additional activity for businesses. The real outcome is a reduction in badly needed state revenue, to the tune of $23 million (the estimate for Massachusetts’ 2012 “tax holiday” tax losses), forcing a scramble to make up the loss through even more service and infrastructure cuts or further reliance on already regressive taxes.

It seems nuts to me to raise our regressive sales tax from 5 to 6.25 percent on the one hand (as we did in 2009) and to suffer through continuing decreases in local aid from the state (forcing communities to make the painful choice of placing divisive override measures on the ballot), while at the same time we appear to take delight in shopping “tax-free” for a weekend.

The especially unfortunate outcome of this short-sighted public policy is further reinforcement of the notion that taxes — the price we pay to be in community with one another — are loathsome and to be avoided whenever the opportunity presents itself.

 


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