Parents look for tax relief beyond sales tax holiday

A new analysis from the Institute on Taxation and Economic Policy called sales tax holidays “ineffective” because they don’t provide permanent relief.

John Craven

Aug 24, 2023, 10:21 PM

Updated 331 days ago

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This week’s sales tax holiday is popular with parents, but many are begging for more permanent relief. That could be a challenge, because Connecticut lawmakers are sharply divided on how to deliver deeper tax cuts.
‘IT IS A STRUGGLE’
Jesus Morales, of West Haven, took his kids back-to-school shopping Thursday at Connecticut Post Mall.
“It is a struggle,” he said. “I've got five kids, so I do it one at a time right now.”
Morales picked this week because it's Connecticut’s sales tax holiday.
“That's why I'm spending this much money, actually,” he said. “Because of the savings.”
Until Saturday, clothes, shoes and other items costing less than $100 are exempt from sales tax.
State leaders are urging parents to hit the stores.
“Let's get out there. Let's spend that money,” said Connecticut Revenue Services Commissioner Mark Boughton.
DEEPER TAX RELIEF?
But how much does all this really help?
A new analysis from the Institute on Taxation and Economic Policy called sales tax holidays “ineffective” because they don’t provide permanent relief.
“Their benefits are minimal while their downsides are significant,” the report said. “These temporary exemptions also fall short because they are poorly targeted, reduce revenue, can easily be exploited, and create administrative difficulties.”
Permanent relief is on the way. This year, Connecticut lawmakers passed historic tax cuts. Most people earning less than $50,000 per year won't owe any state income tax – starting in January. Lawmakers want to go even further.
“Always looking to further expand that for our families to make it workable,” said state Rep. Kathy Kennedy (R-Milford).
But legislators are divided about how to get there.
Democrats favor a child tax credit worth up to $1,800 per family. A credit saves families directly, because it drops your actual tax bill. By contrast, Republicans are pushing for a tax deduction worth $2,000 per child. That would reduce your taxable income.
Both plans have downsides. Critics say the GOP plan favors wealthier families, but Gov. Ned Lamont worries that the Democrats’ proposal is too expensive in the long-term. To allay those concerns, Senate President Martin Looney (D-New Haven) suggested phasing-in a child tax credit over 5 years in an interview with CT Mirror.
‘OPEN TO BOTH’
Jesus Morales said he's not picky, as long as parents get some sort of tax break.
“I'm open to both of them,” he said.
Relief that, for now, is a limited time only. Connecticut’s sales tax holiday ends Saturday.


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