Until I moved to New Mexico, I had never heard of a “Sales Tax Holiday.” As a kid, I learned about rebates from an economist who defined rebates as money that did not have to be charged, which pays for a program to give some money back after the purchase concludes. However, rarely are rebates actual cash returns, but get “built” into the price to sell the product. Consider all the gimmicks and rebates involved in selling a car, and you know the truth and deceptiveness of rebates. Sales tax holidays are one of the biggest scams perpetrated in 17-different U.S. states, and it is time to rip the bandage off this festering wound and apply some sunshine disinfectant!
What is Politics?
Politics is too often a word with so much baggage; people become confused and stop listening after hearing the word politics. According to Webster:
As a Noun, “the activities associated with the governance of a country or other area, especially the debate or conflict among individuals or parties having or hoping to achieve power.”
- “The activities of governments concerning the political relations between countries.”
- “The academic study of government and the state.”
- “Activities within an organization that is aimed at improving someone’s status or position and are typically considered to be devious or divisive.”
- “A particular set of political beliefs or principles.”
- “The assumptions or principles relating to or inherent in a sphere, theory, or thing, especially when concerned with power and status in a society.”
As a Verb, politic/s is derogatory and is defined as “engaging in political activities.”
From Old French Politique “political,” Latin from Greek Politikos, and Politẽs “citizen” and Polis “city.” Thus, we have described the term politics in all its glory and inhumanity. Is the term more understood?
Politics is a descriptive tool used to identify certain human activities where power is sought, and devious means and divisive gestures are employed to obtain that power. Every action tied to securing power through devious means and divisive gestures is politics or political, which means derogatory. For those needing more, derogatory is “showing a critical or disrespectful attitude.” Thus, at the root, politicians by their very name and nature are derogatory towards those who elect them into power.
What is Realpolitik?
Realpolitik is politics or diplomacy based primarily on considerations of given circumstances and factors, rather than explicit ideological notions or moral and ethical premises. For a long time, the American public has witnessed the same political gamesmanship (realpolitik) in the U.S. House of Representatives, the Senate, and the Presidency. All because those in power have intentionally blurred the line between a Republic and a Democracy to stay in control. Never does realpolitik benefit the rule of law or provide equality as a primary and fundamental governance position.
Use the link on Sales Taxes to appreciate progressive and regressive taxes more fully. The sales tax sits at the highest pinnacle for regression of all the progressive ideas needing to be eliminated. Consider this, in states with the highest sales taxes, the sales tax is a reversed pyramid scheme where the final consumer winds up paying taxes on business-to-business transactions, dynamically increasing the price of the final goods or services delivered.
From an article on sales taxes by the Tax Foundation, we find the following important information:
“Narrow sales tax bases reduce collections, but more importantly, they make the tax less neutral and less economically efficient. Many states exempt certain goods (like groceries or clothing) from the sales tax for political reasons, excluding many consumer services (such as dry cleaning, haircuts, or tax preparation) largely by historical accident. Most states instituted their sales taxes during the Great Depression, when services made up a much smaller portion of the economy. Since then, the portion of total U.S. personal consumption dedicated to services has grown significantly, while the purchase of goods has declined. This trend has contributed to the erosion of states’ sales tax bases over time, an unintentional base narrowing that puts upward pressure on sales tax rates.”
How can a person tell that sales tax schemes create inequitable tax bases:
“Curiously, a policy expressly designed to inject progressivity into sales taxes—an exemption for groceries—largely fails to accomplish its purpose. Studies suggest that the exclusion of groceries beyond the necessary exemption for food purchased using SNAP or WIC does not favor lower earners.”
What is a Sales Tax Holiday?
Simply put, a sales tax holiday is a day, usually just a single day when the government allows you to purchase goods and services without paying a sales tax on the receipt. However, all the other sales taxes are still built into the cost of the good or service; just on this special day, the final receipt sales tax is not charged. Sales tax holidays are one of the most inefficient and ineffective methods of “sharing unanticipated government money surpluses with the taxpaying public.”
How do we know sales tax holidays are a gimmick, are ineffective and inefficient, and are nothing but the practice of realpolitik? In 2017, the Federal Reserve researched and found that sales tax holidays only shift normal patterns of purchases, not spurring economic growth, not increasing sales, just moving sales to a holiday to see a minor benefit on regularly planned purchases. What’s worse, sales tax holidays discriminate unequally, making taxpayers the fool.
For example, Florida in 2021 held a “Freedom Week” where camping supplies and outdoor hobby supplies were tax-exempt. As a disabled person, I cannot camp. As an empty nester, there are not many outdoor hobbies for myself and my retired spouse to enjoy where we need supplies. Thus, people like myself and my spouse would not benefit from “Freedom Week.” The same goes for tax-exempt school supplies; not having children in school, we do not benefit from a sales tax holiday as kids prepare to go back to school.
Worse, those in the lowest income brackets, guess what, they do not benefit from sales tax holidays either! Just like in the example above regarding the sales tax “exemption for groceries—largely fails to accomplish its purpose and does not favor lower-income earners. Hence the politikal-gimmickry of sales tax holidays. If your circumstances do not allow you to participate in the sales tax holiday on the exact day (or days) provided by your state, you lose, and the politicians could care less.
Janelle Cammenga, writing for The Tax Foundation, makes the following case:
“Sales tax holidays are political gimmicks that distract from genuine, permanent tax relief. Sales tax holidays are free marketing for businesses to advertise for a 4-7% discount on products. If a state must offer a “holiday” from its tax system, it is implicit that the tax system is uncompetitive. If policymakers want to save money for consumers, they should work to reduce the sales tax rate year-round.”
I agree, mightily, sales taxes are progressive, which makes them a poor tax, to begin with. Adding sales tax holidays make a sales tax worse! Yet, they are sold to the public as if they were the best thing since sliced white bread. While it may be true that taxes are the cost of society, there are better ways to collect taxes, and there are infinitely better ways to spend taxpayer dollars than the profligate waste we see happening daily!
© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.