Retailers Asking for Tax Free Shopping Holidays

Reatilers, including Sax Fifth Avenue, JC Penney and Petsmart, have written a plea to President-elect Barack Obama, appealing to him to instate several tax free shopping holidays across the US, where shoppers can go on certain days and enjoy buying merchandise without any state taxes added to the total of their purchases. For many people, this means a savings of anywhere from six to seven percent right off the bat, including us here in Ohio, to varying degrees since our sales tax varies per county here.

Of course, this means the states would be shorted their typical sales tax revenue on these days, but that also means that the federal government would be asked to reimburse the states for the missing out on taxes for those selected days. Uh-huh, that means another federal “bailout” plan, with your tax dollars, so you have to ask yourself, are you really gaining anything here as a consumer, or are you in the end just breaking even, and the retailers are the ones who are making the money on this, at the expense of tax payers?

I suppose it seems like a good deal at first glance for the American consumer, but upon further examination, I’m not sure it really holds up as much more than an obvious tax break and sales generating machine for retailers. Also, with the economy is such a dire state right now, would the average American consumer really be able to go out on these shopping days and get what they want to begin with? I think these are all questions that the President-elects administration would definitely need to heavily consider before they push something like this through since it’s somewhat radical and different from any other approach.

I suspect this is just one of many pleas that Obama will be barraged with when he finally enters office in January. There will be multiple appeals to him from corporations, industries, and lobbyists, all wanting in on the federal doling out of money, and all pleading their cases that their situations are undoubtedly so dire that they can’t do it without the help of the federal government, destined to fail if they don’t get their share of the onslaught of federal money that seems to be endless lately.

I’m not sure what this all means for the economy, but the hope of retailers is that any excess inventory they purchased for this dismal holiday season will be made up for by the hopeful increase in sales when the economy is thought to possibly rebound, potentially in spring of 2009. Some say that is way too early though, and that we have a much longer path unfortunately.