As a new school year looms on the horizon, the back-to-school shopping season is upon us. Parents across the country are whipping out their wallets and pocketbooks to prepare. With some states offering sales tax holidays this month on items such as qualifying backpacks, clothing, and school supplies, many shoppers might still be recovering from their post-shopping endorphin rush.
Not so in New York—there are no sales tax holidays in that state. However, last week the Tax Commissioner jumped at the opportunity to remind folks that “[e]very day is a New York Sales Tax Holiday.” Why? Because with New York’s “constant exemption,” shoppers can always purchase clothing or footwear tax-free if it costs less than $110; there is no need to limit the holiday to just a brief weekend or a few days.
States’ varying approaches to sales tax holidays highlight the difficulty that tax professionals face in understanding and tracking state tax laws. On any particular purchase, State A might impose sales tax like normal, State B might not impose tax during a sales tax holiday, and State C might offer tax-exempt treatment all year. Keeping abreast of state legislatures’ activities becomes a challenge.
Further, in any given state, it can be difficult to define which purchases are exempt and which are not. For example, a state might exempt clothing purchases during a sales tax holiday. But would that state exempt wristwatch purchases? Belts? Sunglasses? Alternatively, a state might exempt computer purchases during the sales tax holiday. But would that include a tablet computer? What about that tablet’s case, cover, or stand-alone speakers? What about a computerized wristwatch? The devil is in the details. Drafting an airtight bright-line enumerated list is a time-consuming and challenging—if not impossible—exercise for a state legislature.
Strong arguments exist for a simpler sales tax system among the several states, or at least one in which states agree on some common key terms. Advocates at organizations like the Tax Foundation have long argued that sales tax holidays are mere political gimmickry, not good tax policy. Politicians and businesses tend to disagree and point to alleged economic benefits, such as increased foot-traffic in stores during the holiday period. And though it can be tough to quantify those claims, few voters would kick a gift horse in the mouth by favoring more taxes on their purchases.
The message here: sales tax holidays please consumers and elected officials, and they tend to disappoint policy experts. But whether you’re more “we need a holiday” or “the tax code is too complex,” perhaps in the end it’s a moot point—we’ll all be at the mall with the other shoppers. I’ll see you at Auntie Anne’s.
Continue the discussion on LinkedIn: Are sales tax holidays good tax policy?
For more information about state tax issues, sign up for a free trial on Bloomberg BNA’s Premier State Tax Library.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)