Why More States Are Ditching the Return-to-School Tax Vacation

Duty-free weekends have been a back-to-school tradition in many states for years. However, more and more states are canceling these holidays. That’s why.

Some states have duty-free holidays when they exempt certain items from government sales tax. During return-to-school season, these items are usually clothing, uniforms and supplies. Massachusetts is the latest state to ditch holidays, and Kansas, North Carolina, Nebraska, Rhode Island and Wisconsin have also ditched tax-free weekends in the past few years. Bloomberg explains:

Massachusetts authorities have decided not to reinstate the state tax break in August this year due to a slowdown in state revenues, said Democrat MP Stanley Rosenberg, who is the president of the Massachusetts Senate. The state is struggling to support public services due to rising health care costs, he said.

The Massachusetts Department of Revenue estimates the state lost about $ 25.5 million due to holidays in 2015. This reduced the amount of money donated to the school’s trust fund by about $ 4 million, the department said in a December 31 letter to the state controller. …

They cite a report from the Institute of Taxation and Economic Policy, which generally outlines some of the problems with tax holidays. They say states are losing revenues and then have to compensate for it, for example, somewhere else. They also argue that the holiday favors wealthier families who can afford to delay shopping. (Although some might argue that the richer households don’t really need the holiday.) In any case, the report lists the remaining tax holidays across the country. You can read about it at the links below.

Tax Free Pre-School Shopping As States Remove Deferred Payment | Bloomberg via Consumerist

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