Tax policy just isn’t sexy.
Mention the impact of North Carolina’s sky-high marginal income tax rates on average families, or talk about sales tax increases pushing small businesses over the financial edge, and most people’s eyes will roll back in their heads. But a gimmicky sales tax-free weekend Aug. 1-3 may be giving tax policy some unexpected spice. More about that later. It’ll be worth the wait.
The goal of the General Assembly’s second annual no-sales-tax weekend is to give shoppers a break on specially designated clothes, supplies, computers, and other school-related items before students head back to class.
It’s a great idea, sort of. Any break from taxes is cause for a celebration, especially in tax-happy North Carolina, the only state in the country to enact major tax increases the last three years in a row.
But viewing this so-called holiday as a taxpayer victory is akin to being excited the schoolyard bully has stopped beating you up because his arms are tired. It feels great while he rests up, but once he gets his second wind, it’s back to the same old abuse.
That’s the type of convoluted logic lawmakers used to come up with the no-sales-tax weekend. Taxpayers, enjoy the three-day reprieve, because legislators are taking you for a ride the other 362 days of the year. In fact, thanks to lawmakers, everyday shopping became more expensive when they denied a promised sales tax cut scheduled to take effect June 30. Instead, they extended the tax increase, a move that will cost North Carolina taxpayers an estimated $427 million over two years.
The North Carolina Retail Merchants Association cleverly pointed out the detrimental effects of sales tax increases while at the same time promoting the tax-free extravaganza weekend. In a June 25 press release, NCRMA said of the event’s legislative history, “Realizing that the increase of the sales tax hurts both consumers and retailers, the General Assembly voted to offset this plan by creating a weekend that was free of sales tax on items that parents will be buying to send their children back to school.”
Let me get this straight. The Assembly knows high sales taxes are bad. Retailers know they’re bad. Shoppers know they’re bad. Yet using the twisted rationale of too many policy-makers, the state has enacted the very policy that hurts us all.
An even crazier part of this story is found in the North Carolina Department of Revenue’s directive that details which items will be exempt from tax, and which items won’t. The approved list includes standard school must-haves such as sneakers, lunch boxes, and notebooks. But upon closer examination, you’ll find weekend exemptions on girdles, garters, garter belts, wedding apparel, and more.
How’s that for spicing up tax and education policy? Sounds like North Carolina schools are offering much more interesting classes these days. That’s one way to get kids to do their homework. Thankfully, bureaucrats stopped short of going all the way. Cosmetics, jewelry, wigs, and hairpieces will be fully taxed. Apparently, the state doesn’t mind helping students look good, but they certainly aren’t going to help them look like floozies.
The Department of Revenue’s Anna Pope defended these goofy back-to-school bargains, and said that while the weekend is designed primarily to give tax relief to families with school-aged kids, not all tax-free items are for students. Whew. Looks like I don’t have to be so concerned about what’s going on in health class after all.
Besides, Pope told me, the state put a lot of thought into the items. In fact, it took about six months for Sales and Use Tax Division staffers to research and finalize North Carolina’s list of tax-free goodies. I’d have paid a special excise tax to sit in on the meetings state employees held for this project. Imagine the battles the revenuers fought as the list deadline loomed.
“Joe, I’ll vote for garters if you change your mind about the wigs.”
”Sorry Jane, I won’t compromise my sales tax principles. Besides, I believe in full disclosure in government and in one’s personal life.”
Yes, North Carolina, this is what state government does for you. Remember that the next time we’re told the state budget has been cut to the bone.
Despite all this silliness, we should give Pope and her colleagues a break. They aren’t the ones who came up with North Carolina’s ridiculous tax polices, and now, gimmicks.
“I’m here to administer what the legislature passes,” Pope said underneath a chuckle.
Unfortunately, the rest of us are here to pay for it.