I don’t have an opinion either way on this proposal, although that’s mostly because I haven’t given it a lot of thought yet:
Virginians are likely to enjoy the state’s first sales tax holiday on clothes and school supplies as students ready for class this August.
A key Senate committee and the House of Delegates have passed bills that would give taxpayers a break from the state’s 5 percent sales tax for many purchases made the first weekend of each August, starting this year.
Supporters of the tax break say Virginia businesses lose money to stores across state borders in North Carolina, Maryland and the District, each of which lifts the sales tax for certain days each year.
Competition among states should be a good scenario, but since I have little doubt that states will act responsibly with spending cuts, I’m ambivalent. Given that Virginia has a budget surplus from recent tax increases, I suspect the harm will be minor and the benefit will be slightly less minor. All-in-all, this earns more of a “whatever” response. After all, for those in the Northern Virginia suburbs who would drive to Maryland or D.C. to save the sales tax probably aren’t saving as much as they think, since transportation costs (i.e. gas) matter. Saving sales tax on $200 in back-to-school spending would let shoppers keep $10. Two gallons of gas used to shop further away, as well as the extra hassle, seems mostly pointless to me.
What I think is significant about this idea is how well it illustrates the primary problems we’d face with a national sales tax, currently marketed as the Fair Tax. For instance:
Pat Wirth, whose son is a junior at Robinson Secondary School in Fairfax County, said she has considered going into the District to take advantage of the exemption but never was able to fit it into her calendar. But if it’s offered in Virginia, she’ll be there.
“I will definitely target those days,” Wirth said.
She never fit it into her schedule. In other words, she didn’t deem the tax-free shopping offered by neighboring states to be a sufficient enticement to not shop in Virginia. Legislative bodies, in this case the General Assembly, offer solutions in search of a problem. No justification is too inaccurate (was any cost-benefit analysis performed?) to not warrant some meddling with the tax structure. While it may be good, this is the next logical step:
The exemption also would be welcomed by teachers who stock their classrooms with extra supplies for students. And while most families in Northern Virginia can easily afford school supplies, the once-a-year expense is a significant burden for others.
If reporters are offering the qualification that “most families can easily afford” the tax bill, some face a significant burden. It’s good to address that burden, which means more meddling. Meddling means more complexity, with new, and likely hidden, taxes to boost tax
revenue receipts. That meddling will inevitably mirror today’s progressive tax structure, which is not “fair”. No one should believe that we’ll implement a national sales tax and not exempt food, clothing, medicine, and whatever else gets deemed essential. Remember, changing the tax code would not mean that lobbyists suddenly move out of Washington.
For what it’s worth, I’m not too worried about that scenario because I have no faith that Congress has the leadership characteristics necessary to fix the tax structure.