NCPA - National Center for Policy Analysis

Texas Tax-Free-For-All

August 10, 1999

Last weekend, Texas had a three-day tax holiday on its 6.25 percent tax on clothing and footwear priced under $100, and shopping malls were reportedly jammed. Observers say the event -- scheduled to coincide with back-to-school shopping -- was so successful that it probably will be copied by other states.

With crowds approaching those seen only during the Christmas buying season, stores adopted extended hours, hired more staff and offered special promotions.

  • Last week, Florida also lifted its state sales tax on back-to-school items under $100 for the second year and New York plans a tax break in the first week of September.
  • In fact, on March 1 New York will eliminate its 4 percent state tax on all clothing priced under $110.
  • Texas officials estimate the tax holiday will cost the state about $10.5 million in lost revenues.
  • The average family of four spends about $400 on clothing at this time of year -- meaning the tax break saved it $32.

Source: Erik Siemers and Emily Nelson, "Sales-Tax Break in Texas Is a Hit, So Other States May Try It, Too," Wall Street Journal, August 10, 1999.

 

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