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Virginia’s back-to-school tax break covers lingerie but not sports gear
A guide to the ins and outs of state sales-tax holidays
Question of the Day
Planning on buying your daughter some sexy lingerie for her first day back to school this fall?
Well, now you can — free from Virginia state sales tax, thanks to this weekend’s back-to-school clothing and supplies tax holiday.
But, if you’re planning on purchasing some new shin guards for your same soccer superstar daughter who plays on her school’s team, forget it.
Those goods aren’t exempt from the state sales tax during the Friday-through Sunday tax holiday, because state officials decided that doesn’t fall under the category of “clothing.”
“That’s kind of a good example of how it’s really arbitrary,” said Elizabeth Malm, a Tax Foundation economist who worked on this year’s sales tax holiday study ‘Sales Tax Holidays: Politically Expedient but Poor Tax Policy.’
“The term ‘clothing’ can mean a lot of things,” Ms. Malm added. “So you get these weird distortions as to what applies and what doesn’t.”
Virginia politicians, some of whom sent out emails reminding taxpayers of the holiday this weekend, tout sales tax holidays as a chance to buy needed supplies free from the state’s sales tax, which ranges from 5.3 percent to 6 percent, depending on where you live in the Old Dominion.
“I hope Virginians will go out and take advantage of this holiday by spending their back-to-school dollars at Virginia retailers,” Gov. Robert F. McDonnell said in an emailed statement this week. “Not only will this continue to benefit our state’s economy and employers, it will save Virginians some money at the same time.”
But that’s just not accurate, according to economists like Ms. Malm, and the arbitrary list of qualified items is just one issue. Sales tax holidays are really just political gimmicks that benefit politicians more than taxpayers and consumers, she said.
Virginia shoppers have more reason to pay attention than those from other state. With three annual sales tax holidays — one for school items, one for hurricane supplies and one for Energy Star appliances — Virginia is tied with Louisiana for the most annual sales tax holidays in the nation.
Here are the top 10 reasons Tax Foundation economists say sales tax holidays are poor policy:
1. The state-selected list of exempt items is arbitrary, meaning the state can distort consumer choices by picking market winners and losers. Lingerie and wedding attire count as clothing, but shoulder pads do not. For another example, backpacks are exempt from taxes, but duffle bags aren’t.
“It’s sort of distorting what people like to buy,” Ms. Malm said. “I think the tax code should minimize any decision that’s based on taxes from what you buy. It should be based on economic reasons or your preferences.”
2. Tax holidays give politicians points with the public while distracting from the real issue of reforming the tax code. If there’s a need to ease the burden of taxes, maybe the burden is the real issue, conservative advocates say.
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