Morning Jolt: Why Sales-Tax Holidays Are Bad Tax Policy

WITH DOMINIC PINO

August 05 2024

Why Sales-Tax Holidays Are Bad Tax Policy

This is Dominic Pino filling in for Jim Geraghty.

On the menu today: Sales-tax holidays. They sound nice and are popular, but they're bad tax policy.

What Are Sales-Tax Holidays?

It's back-to-school-shopping season, which means it's also sales-tax-holiday season in many states.

A sales-tax holiday is a set period of time when sales tax does not apply to a certain category of purchases. States will announce these holidays ahead of time. The idea is to encourage the purchase of certain goods or ease the financial burden on the purchase of necessities.

Now is the time of year when many states have sales-tax holidays for school supplies. Alabama, Arkansas, Florida, Mississippi, Missouri, New Mexico, South Carolina, Tennessee, Texas, Virginia, and West Virginia all have sales-tax holidays for school supplies in July or August of this year, according to the Tax Foundation.

States also use sales-tax holidays for other goods. Clothing is another common category. Some states have holidays for energy-efficient ...

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