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State "Sales Tax Holidays" Are Gimmicks

Fifteen states will hold sales tax holidays this year, says the Tax Foundation. While retail sales do go up during the holiday, the Tax Foundation says that retail sales for the year do not. Consumers don't spend more; they just time their purchases. So, no, sales tax holidays don't "pay for themselves," as politicians argue. In short, tax holidays are gimmicks used by politicians to favor certain industries and products, which has the effect of introducing "costly economic distortions into the economy," says Micah Cohen, a summer fellow at the Tax Foundation. Instead, Cohen writes, "Tax policy should be neutral to economic decision-making."

By the way, the Tax Foundation, based Washington, D.C., is a nonpartisan research and educational organization that has monitored fiscal policy at the federal, state and local levels since 1937. The foundation is worth watching.

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