Republicans Forget To Pass ‘Key’ Legislation – Hallelujah

There are still some surprises in politics, and some of them even turn out to be for the good.

Consider a development out of Virginia, where the General Assembly “forgot” to pass legislation renewing a sales tax holiday on school supplies. As the Cardinal News reports, the three-day tax break on certain school supplies was expanded to include a host of other items, from energy-efficient appliances to “hurricane preparedness” products.

In short, it became a confused, special-interest grab bag that distorted markets and, in the long run, saved no taxpayers any real money.

But it did serve the audience most concerned about such policy stunts: politicians, who usually go out of their way to pass laws that allow them to play Santa Claus with other people’s money.

The Tax Foundation spares no one in its takedown of these public policy stunts:

In addition to not accomplishing their stated goals, sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. And such holidays are rarely implemented as the result of serious legislative deliberation—as shown by the fact that some Virginia lawmakers were evidently unaware that the Commonwealth’s sales tax holiday was not renewed in this year’s budget. (It is not clear, however, that this was an oversight by legislative leadership, as had been reported; and the expiration was good policy—even if not all members noticed the policy change.) However, while holidays do not do much to benefit consumers or many businesses, free advertising for what is effectively a four to seven percent discount leads many larger businesses to lobby for the holidays.

Rather than indulge in such gimmicks, lawmakers interested in serious tax relief for the broadest swath of taxpayers should work on reform to their tax codes:

If a state must offer a “holiday” from its tax system, it is an implicit recognition that the tax system is uncompetitive. Policymakers should reduce the sales tax rate year-round, rather than relying on politically popular but economically inefficient and ineffective tax holidays.

Sales tax holidays, then are a bit like sleight of hand magic: they are “designed to manipulate objects and deceive spectators.”

It’s far easier to deceive with a three-day holiday than, say, untangle the thicket of exemptions, allowances, carve-outs and favors grafted into many states’ sales tax laws.

Which makes it all the more remarkable that Virginia’s pols forgot about the whole gimmicky business. Perhaps those who say they want to extend tax relief to more state residents will take this rare opportunity to drop the sleight of hand and put their efforts into broad, fundamental and permanent tax reform.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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