Sales tax holiday debate divides those on the left

POLITICIANS’ stances on tax policy can be driven by situational ethics as much as ideological commitment. There have been obvious instances of this on the political right in Oklahoma where, in an about-face this year, some legislative Republicans championed government spending over tax restraint as the best way to generate economic growth.

But examples also abound on the left, where sales tax debates now pit liberals against other liberals.

Oklahoma has had a sales tax holiday since 2007. The holiday’s timing coincides with the start of school, and it’s long been touted as a way to help parents save money on necessary purchases. Oklahoma is one of 16 states with a sales tax holiday, but that number has declined in recent years and may decline further. Those seeking repeal of tax holidays have often been political “progressives.”

Governing magazine reports the number of states with annual sales tax holidays peaked at 19 in 2010. States that have since repealed sales tax holidays include Massachusetts and Georgia. The Massachusetts holiday was repealed in 2016, and efforts to revive it were rejected this year, while Georgia officials junked their sales tax holiday this year.

The liberal Institute on Taxation and Economic Policy has been among those urging repeal of sales tax holidays. In Georgia, the liberal Georgia Budget and Policy Institute promoted repeal. In an interview with Governing magazine, Wesley Tharpe, research director of the Georgia Budget and Policy Institute, appeared dismissive of the savings the holiday provided low-income consumers, and indicated it was more beneficial for the state to collect additional taxes.

Governing reports officials at ITEP argue sales tax holidays “are inherently unfair because they favor better-off consumers who can shift purchases to holiday times, while lower-income, paycheck-to-paycheck folks can’t do that.”

In Oklahoma, the left-leaning Oklahoma Policy Institute also opposes the sales tax holiday, echoing arguments made by ITEP. In a 2016 blog post, OK Policy's executive director called the holiday “a small piece of the numerous misguided tax policies that are drowning our state in red ink.”

This year, the House Joint Committee on Appropriations and Budget voted to end the sales tax holiday for three years. The bill, which passed committee by just one vote, was ultimately shelved. All Democrats on the committee opposed the bill, as did four Republicans. All the supporters were Republicans, contradicting stereotypes for both parties.

House Democratic Leader Scott Inman lambasted Republicans for pursuing the repeal.

“Is it your contention that you think it’s better public policy to raise revenue by making single, working moms pay sales tax on that back-to-school sales tax holiday when she buys clothes for her kids, than it is to restore the income tax cuts that predominantly benefited the most wealthy people in the state?” he asked.

Obviously, Inman doesn’t buy the idea that poor people don’t benefit from the tax holiday.

Given their actions this year, Oklahoma Republicans aren’t going to win any awards for consistency on tax issues. But it’s clear there’s also a division between the ranks of liberal think tanks and the Democratic politicians who would face voters should they put those organization's tax policies into action.