Are Tax Free Weekends Really A Good Idea?
Most states have a weekend or two set aside each year where retailers offer goods on a tax free basis. Many consumers take advantage of these weekends by doing their back to school or holiday shopping at this time. The savings realized from not paying sales tax can be great, but only if you shop with a plan and a purpose. Generally speaking, the biggest savings will come from big ticket items and not from goods that are used on a daily basis. And, with places like outlet malls and online shopping choices, one has to wonder if a tax free weekend really results in any savings at all.
While saving money is always good, and especially saving on taxes, here are some things to know about tax free weekends and why they may not actually benefit consumers or give a boost to the economy:
- For those families at an income level that benefits most from savings, bargains are a year round search and do not take place just once a year. When a necessity is needed, these families search for the lowest price and make the purchase when their budget permits.
- For families that do wait for the tax free weekend to do the bulk of their shopping, the benefit to the economy is not great. This is because these families would have made the purchase regardless of the date, and generally do not overspend. The net result is that the same amount of money is infused into the economy, rather than an increase in consumer spending.
- If you live in a state where no tax holiday is offered, the money you save in sales taxes can well be outpaced by the money spent to travel to another state to enjoy a tax free shopping trip.
Still yet, if you are interested in participating in tax free shopping, the opportunity does exist in many states. In order to take full advantage of a tax free weekend, be sure to know what items are subject to the sale, and plan ahead. With the right plan in hand, you can realize a savings on items your family needs and will use.