Happy holidays

August 23, 2006

Today is the first day of Maryland's five-day sales tax "holiday," the first in a half-decade, but you'll have to excuse parents of school-age children for not getting swept up in the festivities. Dropping the state's 5 percent sales tax on articles of clothing and shoes costing less than $100 now through Sunday is not unhelpful. But it's not exactly easing the pain of back-to-school purchases. Mostly, it's a gimmick.

Granted, gimmicks have a role in the U.S. economy. The sales tax holiday can proudly take its place with the red dot sale, the "buy one, get one free" pitch, and midnight madness. At least 15 states have some form of sales tax holiday (and most, incidentally, were held during the first two weeks of August, when back-to-school shopping began in earnest). Retailers often report a temporary increase in sales, and not just of untaxed items.

But credit card receipts don't lie. Even for students returning to public schools, supply lists are long enough to choke an Office Depot Santa. Rare is the teacher who expects a pupil to arrive for the first day of class without boxes of tissue, a calculator, baby wipes (used primarily for cleaning desks, not the other business), glue sticks, highlighters, zippered plastic bags, dry-erase markers and the usual binders, folders, pens, papers, book covers, dividers, pencil pouches, scissors, etc. Remember when teachers asked for your dad's old cigar box? These days they require a specific name-brand office product - and often in a certain color and style. All of it still quite taxable, holiday or no.

And, of course, there are always the big-ticket items like laptop computers and that must-have fashion and hot athletic shoes. In many schools, PTAs and other service organizations can help low-income students with supplies. Middle-class families are generally on their own.

State officials predict tax-free shopping will cost the state treasury about $5.5 million. That's not unreasonable at a time of relatively robust tax revenues, but it's probably not a particularly smart tax policy. It's unlikely to have any long-term benefit for the economy, and Maryland already has one of the lowest sales tax rates in the region. Genuine tax reform this is not. But it's not hard to see the payoff for politicians in an election year who can now claim to have lowered taxes (if only in a token way) and done something for the working class (ditto).

Taxpayers rarely get something for nothing. For the next five days, they'll be getting a little bit in exchange for, well, a little bit. That may be enough for retailers to leverage into some extra seasonal business, but it sure doesn't pay the bills for the average family with kids and a big-box office supply store to support.

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