The tax holiday was more likely to benefit families that had "the disposable income to buy an $80 sweater for their teen"(De La Torre 2008). To extend this argument, the effect upon equilibrium price and quantity demanded by such non-price sensitive consumers was negligible, resulting in no net benefit to the state's retailers or middle-class consumers. The sales tax holiday on clothing was as equally regressive as a sales tax on clothing -- someone buying a $500 pair of Prada boots gets the same exemption as a poor woman buying her child a much-needed new school uniform, during the holiday period, in contrast to the periods of time when the sales tax was imposed on goods over $75.
But why places a sales tax on clothing, any form of clothing at all? Making the exemption on clothing on items only below a certain amount seems arbitrary. Perhaps shoes in excess of $110 in New York City or $75 in the state of Connectivity seem like luxuries but the same may not be true of a new winter coat or sturdy pair of books, or even basic athletic equipment not provided by the school for a child, such as running shoes. A parent of modest means might still find him or herself unduly penalized. Imposing price ceilings upon certain goods rather than a uniform price ceiling on the sales tax, such as children's school uniforms would likewise not cover all of...
Thus, despite the revenue loss to the state, in the interest of fairness, the elimination of sales tax on clothing would be beneficial, and might help consumers and retailers alike, as more price-sensitive consumers might be more willing to buy slightly more costly, but high-quality goods in excess of $110 in New York State and $75 in the state of Connecticut.
Works Cited
Chamberlain, Andrew. (31 Dec 2006)." New York Democrats call for permanent sales tax holiday." Tax Policy Blog: Official weblog of the Tax Foundation. Retrieved 15 Sept 2008. http://www.taxfoundation.org/blog/show/1325.html
De La Torre, Vanessa. (2008). "State's tax holiday on clothes, shoes begins Sunday."
The Hartford Courant. Retrieved 15 Sept 2008. http://www.courant.com/news/local/hc-cttaxfree0816.artaug16,0,2152521.story?track=rss
Exemptions from sales and use taxes." (2008). The State of Connecticut:
Department of Revenue. Retrieved 15 Sept 2008. http://www.ct.gov/drs/cwp/view.asp?a=1477&q=269920
Sales and use taxes." (2008). NYC Finance. Retrieved 15 Sept 2008. http://www.nyc.gov/html/dof/html/business/business_tax_nys_sales.shtml
Sales tax on clothing
