Letter to the Editor

Tax holiday is smoke and mirrors

Tuesday, August 8, 2006

To the editor:

Missouri consumers have just enjoyed a three-day holiday from sales taxes on back-to-school items. Some lawmakers have proudly described the holiday as a way to help poor Missourians. However, Missourians shouldn't be fooled into thinking that the holiday amounts to substantial tax reform.

More so than other major Missouri taxes, the sales tax requires the poorest families to pay much more of their income toward tax than higher-income families. A 2003 report by the Institute on Taxation and Economic Policy found that the poorest Missourians pay six times more of their income in sales taxes than the wealthiest taxpayers. So, a sales tax cut would benefit working families the most.

However, there is reason to believe sales-tax holidays aren't effective.

For example, we don't know whether stores offer the same sale prices they normally offer. Why would they offer 10 percent off during the sale-tax holiday weekend if shoppers are coming in to save 4 to 6 percent?

The tax holiday offers only the most fleeting relief. When the weekend is over, sales taxes continue to push low-income Missourians further into poverty. This holiday is little more than political smoke and mirrors.

MARK OLSON, Research Associate, Institute on Taxation and Economic Policy, Columbia, Mo.