Tax-Free Back to School Spending Isn’t a Smart Financial Decision
While Cash-strapped Consumers flock to tax free holidays, the data shows it only results in a pull forward of spending that reduces taxable receipts that would have been collected later. Another politically motivated decision that once again was not a smart financial one. Odds are we haven’t seen the last of these in the current election cycle and beyond.
The tax holidays are a “perfect example” of economics and politics being at odds, said William Fox, a business professor at the University of Tennessee at Knoxville. The holidays only move the time of year that people buy items rather than encouraging them to buy more, thereby reducing any economic stimulation, he said. Still, they sound appealing from a political standpoint, which is why legislators keep passing them.
Georgia state legislator Brett Harrell, a Republican, said the state should forego its tax holiday and instead lower its sales tax rate and broaden the base of items taxed. The holiday causes the state to lose about $70 million in revenue each year, he said.
Source: Tax-Free Back-to-School Shopping Over as States Cancel Reprieves – Bloomberg
