Saturday, August 18, 2007

A Weekend Respite from Life's Certainty

Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman, yeah, I'm the taxman
-- from The Beatles hit The Taxman (lyrics by George Harrison)

Showing an amazing capacity for fixating on the empty portion of a glass 3/4 full, Dallas Morning News staff writer Maria Halkias pens a piece of analysis outlining all of the ways that this weekend's sales tax holiday harm the state and its citizens. From the standpoint of Ms. Halkias' piece, the sales tax holiday causes people who are too ignorant to realize that saving 8.25% really doesn't amount to that much to nonetheless spend beyond their means and end up on the brink of bankruptcy. Furthermore, retailers hate it because they have to change the software in their cash registers for the weekend. Besides, the article reports that a so-called consumer advocate complains that libraries might have to reduce hours because the state misses out on sales tax revenue on selected items for two entire days.

For someone claiming to be a consumer advocate to come down on the side against consumer savings is truly an Orwellian development.

Of course, all of the above arguments are rather easily dismissed. Consumers are not just saving 8.25%: retailers competing for business slash prices in order to bring customers in their doors -- just like they do at Christmas. While some people undoubtedly overspend (again, a Christmas comparison is apt), most people buy clothes for school children at this time anyway, and those people are getting more bang for their buck. And, governments that have to shut libraries because they lost a day or 2 a year of sales tax revenue perhaps should look at how they allocate their resources.

The article also resurrects the ultimate argument against all tax cuts: they provide the most relief to people who pay taxes. Thus, someone in the article complains that people who have enough money to buy more as a result save more. Admitting that to be true, one still suspects that the person of modest means who can buy one more shirt or pair of pants because of the savings benefits as much or more than the person who has a larger savings in terms of real dollars.

None of this is to say that The Oracle is a huge fan of sales tax holidays. As a matter of public policy, broad based tax planning and, when appropriate, broad based tax relief provide better solutions. However, many opponents of tax free weekends oppose tax relief on two days because they oppose tax relief of any kind. Against that viewpoint, The Oracle will gladly take his stand.

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