Tax holiday approved in committee | Arkansas Blog

Tuesday, February 22, 2011

Tax holiday approved in committee

Posted By on Tue, Feb 22, 2011 at 10:31 AM

Another Republican tax cut jetted out of a House committee — another cut sold as an economic stimulus that isn't. It's a sales tax holiday for clothing and school supplies on the first full weekend in August. The bill will have a financial impact of $2.1 million on the state's budget. Department of Finance and Administration Director Richard Weiss said after the meeting that DFA had to speak against the bill because it was "one more tax we can't afford to not collect."

From a USA Today article on the spread of this gimmick nationwide:

Policy analysts at both ends of the political spectrum say tax holidays are stunts that don't boost the economy and hurt state budgets.

Sales tax holidays are "a political gimmick," says Mark Robyn of the Washington, D.C.-based Tax Foundation, which backs broader tax cuts.

Tax-free days cause shoppers to shift their spending, not increase it, Robyn says.

The Center on Budget and Policy Priorities, which analyzes public spending's effect on low-income people, says that states can't afford to give tax holidays and that the money is better spent on programs such as education. "It costs states money that they don't have," says Nicholas Johnson, the center's state fiscal project director.

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