I wasn’t going to write about South Carolina’s dumbest tax gimmick this year, because… well, I’ve been there, I’ve done it. But press releases started piling up in my inbox from retailers who wanted a piece of the free media action. Then I came across the animated videos that state employees had presumably spent time – probably time we paid them for – making to promote it.
In addition, the state continues to hold back-to-school sales tax “holidays,” and the Legislature and Department of Revenue continue to refuse to do anything about their utterly mocking list of d zero-rated items – starting with the back-to-school wedding dresses – so with the final celebration kicking off on Friday, what choice did I have? Especially since this insidious little “holiday” does so little for the public – and so much to allow the Legislative Assembly to continue to ignore the real problems of our tax system.
If it weren’t for the fact that the wedding dress was on the IRS example list all along, you’d think the agency handed the task over to Google, which just a week ago provided a photo of diapers when I asked for school supplies.
Speaking of weird Google results: one of those groups that send out press releases to try to get journalists to mention their name trumpeted last week that “cheese” is one of the top words people ask Google how to spell. Which left me totally transfixed trying to figure out how else you could spell it.
Throwback to these back-to-school holidays.
I’ve spent a lot of ink over the past 22 years poking fun at the bizarre distinctions on this list: hunting and skiing clothes are exempt, but sports equipment is not; handbags and purses are exempt, but purses and wallets are not; shower curtains and liners are exempt, but shower curtain hooks and rings are not; shoes of almost every variety imaginable are exempt, but shoelaces are not.
The latest illogical: Schools routinely include hand sanitizers and tissues on their list of supplies they expect students to bring to school, but the agency is keen to say these don’t are not eligible for the exemption.
In fairness to the Department of Revenue, many of these distinctions are dictated by uniform definitions of taxable items and guided by the agency’s efforts to answer specific questions it receives.
Also, in fairness, state law doesn’t actually use the term “back to school” to describe the vacation. Moreover, she does not use the words “tax holiday”. Exactly what then-Governor Jim Hodges called it when he sold it and the Legislature happily bought it in 2000 to help families cope. the high cost of purchasing back-to-school items.
And the Legislature placed virtually no limits on “clothing.”
But someone at the Department of Revenue made the decision, in 2000, to include “Wedding dresses and veils” on its “shopping list” of 38 items of examples of tax-exempt clothing and accessories. Along with other decidedly non-school related items like aprons, bibs, suits, diapers, tuxedos and bathing suits.
And in doing so, the agency encouraged people to do something that would never have occurred to most rational people: plan their lives around buying these items during the duty-free weekend of back to school.
Over the years, the agency has removed examples such as corsets from its shopping list – although these are still exempt, as the legislature has never reviewed the law. Indeed, the Legislature did not change as much as a comma in the bill that the Governor sent. Which is both unimaginable today and a bit frightening, because never in the history of the world has there been a bill (or, for that matter, a column) that was perfect on first draft.
The good thing about vacations is that their short duration makes them relatively cheap, as the tax exemptions disappear. Last year, the Department of Revenue reports, shoppers spent $24.5 million on zero-rated items during the holidays, meaning they saved less than $2 million. The bad thing is that it’s one of our most manipulative exemptions, as state officials tell us what to buy and when to buy it.
The anti-tax Tax Foundation rightly views sales tax exemptions as political gimmicks that “entertain policymakers and taxpayers from real, permanent tax relief.” And give retailers a boost, at least some of which are raising prices during the tax holidays.
Ohio and Michigan enacted the first sales tax holidays in 1980, for automobiles, but the wave that swept through South Carolina began in 1997, when New York State created a temporary tax break on clothing, in an effort to prevent shoppers from crossing borders to escape its high state sales tax. Unlike every other state that has followed suit, South Carolina does not cap the size of untaxed sales. typical elsewhere is a $100 limit on clothing purchases, for example.
The list peaked at 19 states in 2010, dropped to 16 in 2020 and this year rose to 18 as New Jersey lawmakers created one — and several other states that already had tax exemptions added more — in order to use some of their COVID Budget Surpluses.
It would have been nice, when our legislature sought to unload what it considered excess cash, to distribute some of the money to the 40% of South Carolina who do not pay income taxes but pay sales taxes. But I guess we should just be grateful that the lawmakers didn’t tell us we had to buy the things they wanted us to buy in order to get our “discounts.”