Why I Celebrate the Sales Tax Holiday Too

It’s back-to-school time (although I won’t be leaving for grad school until the 22nd) so once again Dave and I are arguing about the sales tax holiday. I realize that my arguments against the holiday aren’t particularly intuitive. The best way my macroeconomics teacher was able to explain it was to write a bunch of cross-price elasticities on the board. And I’m as happy as most people to go to OfficeMax and start hoarding spiral notebooks this Sunday. OK, maybe a little more happy than most people.

I’m even happy that I can’t convince Dave. I firmly believe that the best thing for the economy is a tax that’s consistent every day of the year. I can look up the multivariable calculus to prove it. Dave still won’t be convinced, because our economy is so strong that these small distortions and inefficiencies don’t make much difference. It doesn’t hurt me or the economy in any noticeable way when I buy my notebooks on Sunday instead of Monday. However, more holidays and exceptions would probably have a larger marginal effect. So, I’m happy to allow this particular holiday, to remind me of our economy’s resilience — but don’t enact another one!