It’s back to school time, folks, and that means…. tax holiday! Save money on Susie’s Shrek-bedecked looseleaf binder. Pocket some change from the purchase of Johnny’s new Nikes!
Grrr. Makes me mad just to think about it!
As The Roanoke Times rightfully described this gimmick, the back-to-school holiday on the sales tax this weekend is a “pathetic pander from lawmakers.” Last year, the state lost $3.8 million in revenues thanks to the tax break. Consumers may have saved a few dollars each. Most Virginians probably didn’t even notice.
The Roanoke Times is worried about the erosion of the state’s tax base — the state has better things it could spend the money on. I suppose that’s true, but what really twists my tail is that the state finds it worthwhile to encourage consumer spending. We don’t have a consumer-spending problem in the United States. Oh, let me rephrase that. We do have a consumer spending problem — consumers spend too much. They rack up credit card debt and default on their loans. They pile up all sorts of junk they don’t need and often, upon reflection, conclude they don’t even want. If anything, the state should encourage people to save, not spend!
This narrow-bore tax break doesn’t do too much damage by itself, but it’s part and parcel of a larger problem: littering the state tax code with a special exemptions. When you see a McDonald’s bag on the side of highway, you don’t notice it. But when the fast food bags, candy bar wrappers, soft drink cans and other detritus from our mass consumer culture pile up, the road looks pretty nasty. It’s the same with tax exemptions.
Back in 2003, the Warner administration calculated that dozens of loopholes in the sales, corporate income tax and personal income taxes added up to $600 million per year. (Here’s the list.) No social or economic objective of critical importance was advanced by those tax breaks. The General Assembly has only added to the list since then, repealing very little — if anything at all. If we scotched all these mini tax breaks, we could do something meaningful with the money. The Roanoke Times might prefer to spend the money on poor people, while I recommend using it to eliminate the corporate income tax. Whatever, with that much money, the state could do something bold and make a difference.
To quote the Roanoke Times again, “the tax holiday has nothing to do with sound fiscal policy. It is all about diverting voter attention from the real problems confronting the state.” Amen.
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