Shoppers across the country may have circled this weekend on the calendar weeks ago. The reason? Many states will roll out a “tax free holiday” which will allow consumers to make purchases tax free, in an attmept to boost spending and jump start the local economy. Some decry the move as a political gimmick, but others have lauded the decision and point to estimates (at least in Massachusetts) that the holiday will generate some $500 million in revenue.
The truth is that results have been mixed. A story posted this week in the Christian Science Monitor cites a 2009 dissertation done by the University of Michigan, which found that, “computer purchases did go up with tax holidays, but between 37 and 90 percent of the rise resulted from consumers timing purchases they would have made anyway to coincide with the tax break.”
That study also found that in the month of the holiday, state tax revenue decreased anywhere from .52 percent to 7.83 percent. So in essence, people likely would have made the purchases anyway, so the states were essentially losing out on the tax revenue, not driving impulse spending.
The question is, how will this affect the micro business community? Many small
This guest post is part of our ongoing Micro Business Experts series, and is written by Bob Prentice, founder of www.mrattitudespeaks.com
This guest post is part of our ongoing Micro Business Experts series, and is written by Cathlyn Driscoll, co-founder of Best Business Mastery in New Jersey.
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