April 4, 2008

Show-Me Distortion

Sales tax holidays are bad enough, but sales tax holidays that apply only to things people wouldn’t normally buy are even worse:

The [Show-Me Green Tax Holiday] plan calls for a weeklong elimination of state sales tax on Energy Star-designated appliances each year.

The idea is that people will have greater incentive to purchase "energy-efficient products," but it’s not the state’s job to adjust people’s incentives the way a puppeteer lifts the strings of a marionette. Of course, the state should protect the environment by regulating the disposal of toxic waste, controlling dangerous substances, etc. But a weeklong sales tax holiday won’t have any noticeable effect on the environment, and it will cause harmful economic distortion.

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