Why Did the Sales Tax Cross the Road?
To try to stimulate the economy, Missouri may get another sales tax holiday:
For three days in June, the GOP is proposing to exempt any product costing up to $600 from state or local sales taxes.
"The hope is the state can give a little boost to get people out spending," said the plan’s sponsor, Rep. Mike Sutherland, R-Warrenton.
I’ve already argued against sales tax holidays and failed to convince. But I’ll try again. If a sales tax holiday is a good thing, then why limit it to school supplies? Why not include anything under $600? Why not get rid of the limit? If a three-day holiday is a good idea, wouldn’t three weeks or three months be better? How about all year?
Would people go crazy buying stuff all year round if we got rid of the sales tax entirely? Probably not. They might buy a bit more because things are cheaper. They might be a little more likely to buy something in a store than to order it online. But we would also see a drop in tax revenue, and there wouldn’t be a 365-day shopping spree to make up for it.
So why do people run out to the store for a three-day holiday if they wouldn’t do that for a longer one? If, for example, people are going to buy school supplies sometime in August anyway, they might as well do that during the sales tax holiday. So everyone postpones their trip to the store until those three days and buys all the stuff they would have bought during the week before. To legislators, that looks like a magical economy booster. To me, that looks like switching around people’s shopping days for no good reason.
I guess this year we’ll see whether it works any better in June than in August.