The Washington Post

Sales tax holidays: A good idea during budget shortfalls?

There is a mild kerfuffle brewing over Maryland’s upcoming sales tax holiday, which starts Sunday.

First, some bullet points:

* There are steep budget shortfalls because of continued tough economic times, which have left many without jobs and the state’s tax coffers unfilled.

Sales tax holiday during an economic downturn: Yay or nay? (ANDREW BURTON/GETTY IMAGES)

* The state could lose between $10 million and $15 million in tax revenue during the holiday, according to estimates.

* State comptroller Peter Franchot told the Baltimore Sun: “It benefits the retail stores in Maryland, which provide 70 percent of the jobs. Most importantly, it helps the citizens, many of whom have been hammered by the recession, to get a little relief.”

*Critics, including the conservative Tax Foundation, argue that sales tax holidays don’t spur economic growth: “Sales tax holidays introduce unjustifi­able government distortions into the economy without providing any significant boost to the economy.”

And now, my question to you:

Michael Rosenwald is a reporter on the Post's local enterprise team. He writes about the intersection of technology, business and culture.

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