August 9, 2009
Tax Foundation Summer Intern Micah Cohen Opines on Gun Sales Tax Holiday in Shreveport Times (LA)
"Second Amendment holiday misses target"
By Micah Cohen
Fifteen states will have sales tax holiday weekends this year, most of them tied to back-to-school or hurricane-preparedness savings. But not all sales tax holidays are created equal. A new trend has emerged in sales tax holidays recently as Louisiana Gov. Bobby Jindal enacted a "Second Amendment Weekend" that exempts all state and local sales taxes for rifles, handguns and a litany of hunting-related supplies for the first weekend of September. While South Carolina was the first to implement such a plan, other states, including Texas and Kentucky, are considering introducing similar gun sales tax holidays.
The tax breaks are pitched as a way to spur economic activity. Supporters argue that the holiday will increase the number of guns purchased. Since the 1980s, politicians have been claiming that a sales tax holiday, through increased economic activity, will "pay for itself." While it is true that general sales go up during holidays, overall retail sales for that month might not.
The New York State Department of Taxation and Finance conducted a study on the value of its own sales tax holidays. The study found that while sales increased during the holiday period, sales for the year were almost unchanged. Shoppers didn't buy any more goods; they simply shifted the timing of their retail purchases. This trend, which includes a dip in sales the weeks before and after the tax holiday, has been seen in other states with similar tax holidays and is expected in Louisiana.
