Introduction
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I was more than a little elated (and pretty surprised too) to discover something really cool that my state…the state of Wisconsin is currently offering.
A Sales Tax Holiday! Buyer’s can realize significant savings when purchasing apparel or computer related equipment.
17 other states will offer similar holidays this year. Many of them will take place this coming weekend. But for Wisconsin, this is the first of its kind. Our sales tax holiday began 2 days ago…on August 1st and it runs through Sunday August 5th. 5 days is definitely one of the longest Sales Tax Holidays occurring in 2018. Most of them are just for 2 days…usually falling on a weekend.
My childhood home in northern Wisconsin
What Kind of Merchandise is Offered as Tax Exempt During the Holiday?
I learned about this holiday from a marketing email that I received from the Apple Store a few days ago. The main reason why Apple wants to notify its users is because in most cases the primary merchandise that offers tax exempt status are computer and tablet related things.
That brings up another aspect that’s somewhat unique about Wisconsin’s holiday. In addition to computer equipment our sale also makes apparel tax exempt. Many other states just exempt computer equipment, and some primarily exempt things necessary for people who might face significant threats from the weather. Florida for example, had their sale in June, right before hurricane season began.
While this is the first year that Wisconsin will celebrate this unique holiday, some other states have enjoyed similar, yet slightly different renditions for much longer. New York State created the first sales tax holiday in 1997 primarily to lure shoppers from the neighboring of New Jersey. Several other states copied and pasted a similar version of New York’s statue to their own books, so that by 2010 19 states offered tax holidays. This was the peak number of states offering Sales Tax Holidays,
If you’d like to learn even more about this unique Holiday, as well as learn more about the other states also celebrating it…read on…
Which States Will Soon or Have already Celebrated Their State Sales Tax Holiday’s in 2018?
Right now, according to Apple, there are 5 states that will be celebrating this awesome holiday this coming weekend. Apple has written a brief synopsis of each state’s holiday which includes what kind of merchandise is included in the each states’ program and sometimes why the sale was originally enacted.
According to the website of the Federation of Tax Administrators, 17 states, in total celebrate this holiday in 2018. Some states will offer the holiday more than once! You can see the Federation’s illustration below which shows each state and when their Sales Tax Holiday was or will be in 2018.
While that may not seem like a lot, remember that some states don’t really charge much in the way of sales tax to begin with. The state of Minnesota comes to mind because it’s close geographically to us. My family has always LOVED going there to shop for clothing because we get so much more for our money!
Below is a great visual bar graph representing all 50 states. It gives you an immediate feel for any one state’s relative sales tax as compared to all other states.
This next illustration shows what the actual percentage is that each state charges for their sales tax.
Wisconsin’s Sale’s Tax Holiday | August 1 – 5, 2018
Before shoppers take to the malls tomorrow, you should definitely check out what the specific ‘rules‘ are for Wisconsin’s sale. For example, apparel is exempt…as long as each individual item is priced below $75. The rules for computing equipment are more complex, but still easy enough to follow with a quick look through the state’s website.
The Dept. of Revenue’s Website about Wisconsin’s State Sales Tax Holiday
WI’s Tax Holiday Terms & Conditions
More About What Kind of Merchandise is Exempt from State Sales Taxes During the Holidays
Each state has its own unique sales tax exemptions during their holiday. These are oftentimes based upon the stated reason for the initial sales’ holiday.
For example…in Wisconsin the primary impetus for the sale is ‘back to school.’ This reason dictates much of the merchandise that’s tax exempt during the sale. Since school kids usually need both school clothes and computers…that’s the primary type of merchandise which is ‘on sale‘ here in Wisconsin currently.
Where to Find More Information
Probably the best place to find out more information about the upcoming sales tax holiday’s for the state’s that Apple mentions at their website is by following the links to their brief synopsis for each. Those are the 7 states shown further up in the 2nd illustration of this post and they can also be found here.
From there, Apple has included links to each state government’s appropriate website for their sales tax holiday.
Are Sales Tax Holidays Beneficial?
The short answer of course is…it depends on who you ask! imo…a resounding YES would be the answer. However, from the standpoint of state’s and their financial solvency…its another matter entirely.
While researching information for this post I ran across several fairly negative articles. The first was written by the Institute on Taxation and Public Policy in 2016 and it questions the effectiveness of the holidays as opposed to actual sales tax reforms. The 2nd was written in 2017 by the taxfoundation.org. It questions effectiveness of the sales too by suggesting that while these kinds of holidays are politically expedient they constitute poor tax policy. They suggest that if such holidays are necessary then perhaps tax reform is called for.
Combined, these are some of the major arguments against the effectiveness of these holidays. First, in this 2013 Washington Post article, the question of whether or not these holidays actually contribute any significant growth in sales tax revenue is discussed. The answer, while complicated, appears to suggest that no real stimulation occurs directly as a result of these sales.
If these holidays are intended to specifically provide tax relief to low income households, an argument against them is that the percentage of actual low income family’s who do really benefit is small when compared to the much larger number of average income and high income beneficiaries.
Last, the most thorough analysis of pros versus cons is made in the recently updated article by the Institute of Taxation and Economic Policy. In it they state:
“In the long run, sales tax holidays leave a regressive tax system unchanged, and the benefits of these holidays for working families are minimal. Sales tax holidays also fall short because they are poorly targeted, cost revenue, can easily be exploited, and create administrative difficulties.”
Conclusion
My brief perusal of current literature seems to suggest that there are few real benefits which emanate from these Sales Tax Holidays. While that realization has somewhat of a chilling effect it doesn’t diminish my own excitement to personally experience my state’s first Sales Tax Holiday this coming weekend with a much-needed shopping spree for the family and some new outfits for everyone!
One last thing I should add is that I was further surprised to discover that online retailers such as Amazon also participate in these holidays. I recently tried out apparel shopping at Amazon and I was kind of blown away with the impressive quality of the things I decided to keep…especially when taking into consideration the low prices involved. Below is a picture of my favorite find…a sweater with pockets for $19.88. I loved the first grey one so much that I ordered 3 more in the different colors shown below!
I should also add that I’m an Amazon Associate, which means I earn a small commission if a product I recommend is purchased by a reader. You can read more about that in the next illustration.
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