It’s back-to-school time again, and for many families it’s time to start planning shopping trips to stock up on supplies and new clothes for the coming year. For many states, this means hosting sales tax holidays to assist parents and students with these annual purchases.
Sales tax holidays are limited windows of time during which state or local governments exempt certain purchases from sales taxes. Typically occurring in July or August of each year, lawmakers often time the holidays to coincide with seasonal needs, such as school shopping, severe weather preparation or hunting seasons.
Although popular with both lawmakers and constituents, many economists argue that these holidays are ineffective at delivering the economic relief they claim to provide. Yet, with a legacy of more than 35 years and occurring in nearly half of all states, sales tax holidays possess an undeniable staying power. So, if sales tax holidays are bad policy, why do we like them so much?
