As tax-free shopping weekends become the new ‘publicity stunt’ to get Americans to spend money, more and more states are signing them into law. Tax-free shopping weekends are now in effect in states in every region of America from Florida to Alabama and New Mexico to Tennessee. Massachusetts is the latest state to have a tax-free shopping weekend signed into law. A couple of states even have several tax-free shopping weekends throughout the year. But, are tax-free shopping weekends good for the economy and for the consumer? No, they’re not and here’s why.
Do People Save Money on Tax-Free Weekends? – Sure, you’ll save some money if you shop for big ticket items on a tax-free shopping weekend, but not that much really. With the average state tax in the US around 6.25%, if you purchase a TV at $1,500 you’ll still only save $93.75. Not a huge amount to say you’re already laying out $1,500.
People Spend More on Tax-Free Weekends – Shopping on a tax-free shopping weekend, people spend more money than they usually would as they think they’re saving money. They buy products they don’t really need then, later in the month when they have to buy necessary items, they end up spending less as the money they would normally have to spend has already been spent.
Tax-Free Weekends Encourage Getting in Debt – Human psychology being what it is, consumers often end up getting in even more debt than they already are during these weekends. Their intuition tells them they’re ‘saving money’ so they spend more on products they don’t need when, in reality, they’re not ‘saving money’ but spending more than they should. Charges get put on credit cards and suddenly the consumer is in more debt. With the failing American economy a product of over-spending, Americans buying things they don’t need is what got the country into the mess it’s in in the first place.
Tax-Free Weekends Cost Consumers More – Most consumers shop on tax-free shopping weekends and put all their purchases on credit cards. With credit card interest at 15-25% on average credit cards, unless you pay off your purchases before the grace period ends, the products you buy actually cost you more. Sure, you save 6.25% but, by the time you’ve paid the item off, you’ve often spent 15% or more than the actual cost just on credit card fees. In the long-term, the item you buy costs you several hundred dollars more than it would have if you’d waited and paid in cash on a non-tax-free shopping weekend.
Tax-Free Weekends Take Money Away From Social Services – Now, I’m not a big proponent of taxes but they are necessary. Taxes pay for roads, schools, health care, clean air, charity organizations and a whole lot more. With, in some states, several weekends a year being tax-free shopping days that means a large chunk of tax money doesn’t go into the state’s coffers, which means down the road the state sometimes has to cut services it would normally have the money to pay for. Ultimately detrimental to society and to the Americans that live in it.
Tax-free shopping weekends are nothing more than a marketing ploy by the government to encourage Americans to buy things they don’t need. If you are disciplined and buy items on a tax-free shopping weekend you have budgeted for and are paying for in cash then, yes, tax-free shopping weekends are a good deal for you. Unfortunately though, the vast majority of Americans are not disciplined. On a tax-free shopping weekend, they will spend money they don’t have on items they don’t need then spend the rest of the year paying them off on high-interest credit cards. Stupid. Really stupid. And extremely detrimental to the long-term recovery of the US economy.
Tax-free shopping weekend bill in Mass. signed by Governor – Christian Science Monitor
2010 sales tax-free holidays – Tax Admin.org