September 2, 2009
Tax Foundation Director of State Projects Joseph Henchman Responds to Criticism of Sales Tax Holiday Paper in Tulsa World Letter to the Editor
Needed: Reform, not Santa Claus"
By Joseph Henchman
In attacking the Tax Foundation's exhaustive report, which found that sales tax holidays are little more than political gimmicks, state Sen. Jay Paul Gumm, D-Durant, boasts that such holidays save millions of dollars for Oklahoma families ("Report doubts tax-free effects," Aug. 28).
This is just political rhetoric and wishful thinking. Our research finds that these savings are actually tiny, and are nothing compared with the real-world consequences of compliance costs, labor misallocation, inventory crunches and price distortions. It's also nothing compared with Oklahoma's nearly $7 billion state government budget.
The Oklahoma tax holiday's arbitrary list of eligible products is so narrow, and the holiday length so short, that for many Oklahomans a 4.5 percent discount isn't worth the lines and crowds.
Gumm pretending to be Santa Claus with other people's money may be politically popular, but it's not good tax policy. A state that needs a holiday from its tax system, or that sees its residents traveling across state lines to shop, is a state with a broken tax system.
If Gumm thinks the sales tax is too high and is concerned about saving Oklahomans millions of dollars, then he should work to cut the sales tax rate year-round.
