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Economy / Taxes

Sales Tax Holidays ? Ineffective Economic Medicine

By Sarah Brodsky on Mar 26, 2008

An editorial in the Southeast Missourian (link via Combest) compares the proposed sales tax holiday to cough syrup:

A statewide proposal to create a sales-tax holiday in late June to stimulate the economy is drawing criticism. You might compare the idea to taking cough syrup; it may not taste very good to some, but overall it will leave the economy feeling better.

This is an apt comparison, although not for the reason given in the editorial. Cough syrup temporarily makes you feel better, but it just masks a symptom; it doesn’t make your cold go away or improve your health in general. Likewise, a sales tax holiday appears to help the economy for a few days, but without doing any long-term good.

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Sarah Brodsky

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