RACINE COUNTY — As Wisconsin’s first sales tax holiday came to a close Sunday, businesses enjoyed higher traffic from shoppers saving at least 5 percent on back-to-school products from Aug. 1-5.
Businesses applauded the holiday, citing increased revenue and more shoppers.
Shopko, 4801 Washington Ave., experienced one of its busiest weeks, according to store manager Jim Welch.
“It was very good for business, incredible actually,” he said.
“I can tell you that these (tax holidays) are some of the busiest weekends for our stores each year,” Walmart spokesperson Erin Hulliberger said in an email to The Journal Times. “We’re excited to be participating in these events because they help our customers save and bring home more of what they need for the back-to-school season.”
Walmart operates full-service stores in Mount Pleasant and Burlington and a smaller Neighborhood Market in Mount Pleasant.
Wisconsin is one of 17 states that now has a sales tax holiday. A study conducted in Ohio by the Economics Center, a nonprofit affiliated with the University of Cincinnati, found that sales tax holidays saved the average Ohioan family $38 per year. The impact on lost tax revenue for the state was “negligible,” according to Christopher Nicak, co-director of research for the Economics Center.
“We didn’t notice a noticeable falloff of sales tax collection,” Nicak said. “(It was) a qualitative and emotional boost to families.”
Official statistics have not been released for Wisconsin’s holiday, but Gov. Scott Walker's office estimates that it would cost the state approximately $14.8 million in lost sales tax revenue.
The sales tax holiday bill also included a $100-per-child tax rebate for parents who applied before the July 2 deadline. Approximately 1.22 million children from 671,000 families were eligible for the rebate.
Nicak added that their study found that the money saved by families was rarely truly “saved,” but rather ended up being used for other purposes, thus still finding its way into the economy and eventually being taxed.
Critics chime in
Not everyone agrees that these holidays are beneficial.
When Wisconsin’s holiday was approved in the state Senate in March, Sen. Kathleen Vinehout, D-Alma, who is one of the candidates seeking the Democratic nomination for governor in Tuesday's primary, told a Milwaukee newspaper that it looked like Republicans and Walker had “bribed” voters.
Jay Miller, a retired U.S. Department of Justice tax attorney and current visiting fellow at the Badger Institute, a nonprofit policy research organization based in Milwaukee, wrote an article in May entitled “Arbitrary tax breaks neither good policy nor good economics.”
“I’m not a fan of this,” Miller told The Journal Times.
Despite studies like the one from The Economic Center, Miller believes that the money saved by consumers during the holiday won’t pay off for individuals or the government in the long run. Miller considers short-term tax breaks to be a “miniaturized carrot and stick.” He would prefer “wholesale tax reform,” especially by lowering state income taxes across the board.
“We’ll see what happens. To me, it was politically motivated,” Miller said. “Politics and policy can go hand in hand.”