Consumption Responses to Temporary Tax Incentives: Evidence from State Sales Tax Holidays†

Consumption Responses to Temporary Tax Incentives: Evidence from State Sales Tax Holidays† AbstractStates offer sales tax holidays (STHs) temporarily exempting items like clothes, shoes, and school supplies from the state sales tax. Spending response to these temporary tax changes are investigated using two datasets: the Diary portion of the Consumer Expenditure Survey and a unique dataset of credit card transactions. Results based on a difference-in-differences methodology show that there are substantial increases in spending on covered goods during these holidays that are not offset by declines in spending before or after the holidays. (JEL D12, H25, H31, H71) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Consumption Responses to Temporary Tax Incentives: Evidence from State Sales Tax Holidays†

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
1945-7731
D.O.I.
10.1257/pol.20130429
Publisher site
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Abstract

AbstractStates offer sales tax holidays (STHs) temporarily exempting items like clothes, shoes, and school supplies from the state sales tax. Spending response to these temporary tax changes are investigated using two datasets: the Diary portion of the Consumer Expenditure Survey and a unique dataset of credit card transactions. Results based on a difference-in-differences methodology show that there are substantial increases in spending on covered goods during these holidays that are not offset by declines in spending before or after the holidays. (JEL D12, H25, H31, H71)

Journal

American Economic Journal: Economic PolicyAmerican Economic Association

Published: Nov 1, 2017

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