The impact of high sales taxes -- a local case study


An observant reader writes about the recent simulated sales tax holiday at Tulsa's Promenade:

[My wife] and I noticed that sales boomed at Promenade Mall when all the stores effectively reduced taxes to zero. This is a perfect, community specific case study of the impact of taxes on consumer spending. Since consumer spending in Tulsa increases with decreased taxes, it is logical to assume that spending will decrease with increased taxes. Additionally, if we were to check on sales at Woodland Hills mall, which probably charged taxes that day, I'd guess that sales dropped measurably. The conclusion: Spending will flow to the lowest cost supplier. If Tulsa increases its taxes, then consumer spending will both decrease and flow to some lower cost city.

I imagine that Bartlesville's sales tax relief drive the same weekend provided an incentive for Tulsa malls to match the offer, to keep Tulsans from making the short drive to Bartlesville to make their back-to-school buys.

Another friend tells me that she defers clothes purchases until she visits family in Minnesota every year -- no sales tax on clothing in the North Star State.

My family spent more than we planned at the outlet mall on a visit to Delaware a few years ago -- no sales tax at all in that state. They even advertise that on their state road maps. Here's a bit from a column defending Delaware's tax structure:

I heard it whispered at cocktail parties, when I was still welcome at them, that Delaware tax structure is incomplete without a sales tax. Those who whisper are fat enough to pay a sales tax and have plenty left over to hope for the best in the bond market.

The burden of a sales tax would fall heaviest on those who have little money to spend on anything that wouldn't be subject to a tax. Before I am accused of fomenting class struggle, I should note that a number of Delawareans have earned fortunes by the absence of a sales tax in the First State.

The right-wingers, including columnist George Will, a fine baseball writer, nonetheless call my arguments "the politics of envy." I call it "the politics of fairness."

This right-winger says, "Amen, brother."

Here's a map showing weighted average sales tax rates around the country.

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This page contains a single entry by Michael Bates published on August 6, 2003 9:51 PM.

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