Weekly Roundup: Sales Tax Holidays ­ Poor Tax Policy?

This week saw the release of a new report by the Tax Foundation, Sales Tax Holidays: Politically Expedient but Poor Tax Policy, which takes a closer look at whether sales tax holidays actually live up to all their hype.

“Sales tax holidays are based on poor tax policy and distract policymakers and taxpayers from real, permanent, and economically beneficial tax reform,” the report concludes.

While sales tax holidays are a popular tax tool, many of the assertions made in support of sales tax holidays fall short of their mark, the report finds. For example, “[j]ob creation is a frequent argument in sup­port of sales tax holidays,” the report explains,  but by “focusing on encouraging a few days of tem­porary employment during sales tax holidays, lawmakers lose sight of and undermine policies that promote long-term economic growth and job creation.”

Supporters also claim that sales tax holidays “stimu­late the economy,” the report states. However, the report argues, “[r]ather than stimulating new sales, sales tax holidays simply shift the timing of sales.”

In other developments,

Alston + Bird’s State and Local Tax Advisory provides an analysis of the New Jersey Supreme Court’s recent decision upholding the constitutionality of the state’s throw-out rule.

Morrison & Foerster releases their August 2011 issue of their New York Tax Insights.

Arizona and Ohio get ready for the launch of their amnesty programs.

By Priya D. Nair

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