They’re popular, highly visible, and marketed as taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. relief—but research shows sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. holidays are inefficient, create compliance headaches, and often miss the mark for the taxpayers they’re meant to help.
Kyle Hulehan is joined by Katherine Loughead, Senior Policy Analyst and Research Manager at the Tax Foundation. Together, they break down why these policies persist—and what better alternatives might look like.
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Sales Tax Holidays by State, 2025 See more
Sales Tax Holidays: Bad Policy Any Year, But Especially in Response to High InflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spendin See more
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