August 18, 2017

NPR’s MarketPlace: Doing the Math on Back-to-School Tax Breaks

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This week, we’re going to talk a little about saving. Sixteen states offer tax holidays during the year, a tax-free day or two of purchasing certain items, like hunting gear and weather-preparedness products. Several of those states have specific back-to-school sales tax holidays targeting school supplies. It’s a popular but controversial tool meant to help people save a few dollars as they stock up on pencils and notebooks for the year and give local businesses a bump.

But Meg Wiehe isn’t buying it. She’s the deputy director at the Institute on Taxation and Economic Policy, a nonprofit, nonpartisan think tank that studies the effects of tax policy. She said there are very few winners in this game, and some significant losers, too.

“Ultimately, I really think that it benefits lawmakers more than anyone,” Wiehe said. “If you’re a lawmaker … you get all this free advertising. Retailers are doing all the work for you, and it looks like you’re doing something great for your constituents.”

And, she said, research has found that there’s no real benefit to retailers, who expect to see increased traffic in their stores. But consumers are simply shifting the timing of school purchases that they would make anyway.

“The taxpayers themselves, those getting the break, not really the winners either for a number of reasons,” Wiehe said. Read more