Tax Holiday Weekend: Unfair Gimmick

As reported in today’s N&O, back-to-school shoppers are gearing up for some tax-free shopping this weekend.

At the risk of raising the ire of bargain shoppers across the Tar Heel State, the notion of a "sales tax holiday" is simply bad tax policy. One of the primary tenants of sound tax policy is to apply a consistent rate of taxation to similar behavior. This tax "holiday" scheme clearly violates that tenet. If a shopper buys $100 worth of school supplies today, they face a 6.75% tax rate. If another shopper buys the identical $100 worth of school supplies tomorrow, they pay no tax. 

Favoring such a specific behavior (i.e. buying specific items on a specific weekend) is also inherently unfair. Targeting a specific group of consumers equates to punishing the rest of the consumers who are denied a lower overall sales tax rate that could be achievable without this gimmick. What about parents of children not yet of school age? What about families who are traveling or otherwise busy this weekend and can’t get to the store to take advantage of the tax exemption? Or what about parents with children in year-round schools? As the article notes:

"Parents with kids in year-round schools usually miss the tax savings because their schools start earlier. Myra Dean of Raleigh, mother of 15-year-old Brandon Collins, said she hasn’t been able to take advantage of the holiday.

"We miss it every year because he has always been in year-round school," she said. "It’s not fair."

A better policy would be to stop rewarding such a specific group of shoppers and offer broad-based relief for all North Carolinians.