Lawmakers in many states have enacted “sales tax holidays” (16 states will hold them in 2019), to provide a temporary break on paying the tax on purchases of clothing, school supplies, and other items. While these holidays may seem to lessen the regressive impacts of the sales tax, their benefits are minimal. ITEP’s policy brief Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform looks at sales tax holidays as a tax reduction device.
Policymakers tout sales tax holidays as a way for families to save money, but sales taxes are inherently regressive. And a two- to three- day sales tax holiday for selected items does nothing to reduce taxes for low- and moderate-income taxpayers during the other 362 days of the year.