Ready to splurge on sales tax-free school supplies and clothes now that September is around the corner?
You might want to slow down.
While sales-tax holidays sound like a great way for buyers to save money, they disproportionately benefit wealthier shoppers, according to a report from the Institute on Taxation and Economic Policy, a Washington, D.C.-based tax policy research center.
"No matter which state it is, sales taxes fall heavily on low income families as a share of income," said Meg Wiehe, state tax policy director at the institute. "They spend the vast majority of their income on consumable items."
The problem with sales tax holidays is that a two- to three-day break on taxes for school supplies and clothes provides a greater benefit to those who can afford to spend more on those items, the report said.