The Toledo Blade: Ohio Readies for First Break on Sales Tax
media mentionHowever, Carl Davis, a senior analyst at the Institute on Taxation and Economic Policy, a nonprofit nonpartisan Washington think tank, said that while tax holidays help retailers, they don’t accomplish much else.
“I think the major takeaway with sales tax holidays is they’re high profile and they get a lot of favorable attention for politicians, because people notice these sale tax holidays,” Mr. Davis said. “But at the end of the day, they’re not going to do a whole lot of good. They’re a distraction, mainly.”
Sales taxes are “regressive taxes,” Mr. Davis said. A regressive tax is one that is applied uniformly, and therefore takes a larger percentage from lower income people than from higher income people.
“A three-day holiday doesn’t amount to much,” he said. “And the lower income families that would benefit most by from a tax holiday, they don’t always have the time to take a break to shop during these holidays.”
He said there is some question whether retailers might be tempted to take advantage of the holiday by raising prices or forgoing usual discounts.
“There was a study done in Florida that looked at prices and found the sales tax holiday was such a popular event that retailers didn’t have to offer quite as good of [discounts] that weekend,” Mr. Davis said. “They found that you are not guaranteed that the best sales are happening that weekend and that some of the savings might be pocketed by the retailers.”
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However, Carl Davis, a senior analyst at the Institute on Taxation and Economic Policy, a nonprofit nonpartisan Washington think tank, said that while tax holidays help retailers, they don’t accomplish much else.
“I think the major takeaway with sales tax holidays is they’re high profile and they get a lot of favorable attention for politicians, because people notice these sale tax holidays,” Mr. Davis said. “But at the end of the day, they’re not going to do a whole lot of good. They’re a distraction, mainly.”
Sales taxes are “regressive taxes,” Mr. Davis said. A regressive tax is one that is applied uniformly, and therefore takes a larger percentage from lower income people than from higher income people.
“A three-day holiday doesn’t amount to much,” he said. “And the lower income families that would benefit most by from a tax holiday, they don’t always have the time to take a break to shop during these holidays.”
He said there is some question whether retailers might be tempted to take advantage of the holiday by raising prices or forgoing usual discounts.
“There was a study done in Florida that looked at prices and found the sales tax holiday was such a popular event that retailers didn’t have to offer quite as good of [discounts] that weekend,” Mr. Davis said. “They found that you are not guaranteed that the best sales are happening that weekend and that some of the savings might be pocketed by the retailers.”