Two Wisconsin legislators are proposing two small sales tax holidays each year. By now you have probably heard that State Representative Chad Weininger (R-Green Bay) and Seator Rick Gudex (R-Fond du Lac) are pushing a proposal for a back to school tax holiday in August with a second one early in November for energy efficient appliances. The Wisconsin Department of Revenue estimates that the holidays would save consumers $14.5 million each year. Here are the details on the holidays:
Under the proposal, a sales tax holiday would be slated for the first full weekend of each August, with tax exemptions for school supplies and clothes selling for $75 or less; computers selling for $2,000 or less; school computer supplies selling for $250 or less; and textbooks or other instructional materials selling for $300 or less.
This appears to be the legislatures way of couponing because they assume people will shop for the non-tax items but buy other taxable items at the same time and help make up for the shortfall in tax revenues…I am not so sure and I am not going to pursue that line in this post.
“The consumer is taking advantage of this holiday, but they are purchasing other items that are taxable,” said Scott Stenger of the Alliance of Wisconsin Retailers.
I added this quote, not because of its content, but because it is from a spokesperson for the Alliance of Wisconsin Retailers. And here is why. Has anyone asked small retailers about the impact on their software to handle these tax holidays? I was the project manager on rewriting a sales tax system for a national retailer…and the changes they are suggesting aren’t trivial. Now I don’t think this is an issue for the big nationals like Walmart, Target, Macy’s or whatever. They already have to handle tax holidays in other states where they do business. But Rep. Wieninger and Sen. Gudex are suggesting a holiday defined by limited specific days, limited specific items with caps on the maximum amount that is tax free. Are our small retailers equipped to handle this? Will their cash register software vendors have the flexibility to provide the changes quickly and correctly? Will it cost the small retailers more than it is worth? (And will it actually increase sales or not?)
But has anyone asked Wisconsin business people the question?
The problem with a tax holiday is we will have an inflated rate the remainder of the year, which deter sales the remainder of the year. The way I see it is that we should eliminate the income tax for people making under 100k because those people already pay a variety of other taxes. Sales and property tax we should look to lower. What we need to do is start taxing the capitol gains of rich people so they pay taxes just how everyone else pays taxes every time they earn capitol or purchase goods.