At least 17 states have back-to-school tax holidays. California isn’t one of them. Here’s why

At least 17 states in the U.S. had some form of a tax holiday for back-to-school shoppers but the last effort to enact one in California died without a hearing. |

Sarah Shaw has four sons in the Santa Rosa City Schools district ranging from elementary to high school. That’s four backpacks, four new pairs of shoes, four sets of classroom supplies — a grand total of more than $1,000 in back-to-school shopping costs each year.

And this year she and other back-to-school shoppers faced some of the highest prices on clothes and supplies in years.

“I’ve always really tried to budget that stuff … but the teachers give quite extensive class lists now,” said Shaw, whose sons started school on Aug. 14. “I spent $200 on class lists for two.”

When she lived in Tennessee, there was one weekend a year when she could save over $100 off her grand total. The state has a back-to-school sales tax holiday that made some of the school items her children needed tax-free. Though the savings were small, they added up.

But while 17 states have back-to-school tax holidays on school supplies, select electronics and clothing, California isn’t one of them.

If it were, Shaw said: “I would be that person, waiting for the tax holiday to shop on that day.”

Why doesn’t California have one?

The California legislature has the authority to set any kind of sales-tax holiday, according to the Department of Tax and Fee Administration, even though it doesn’t have one at the moment, a department spokesman said.

There have been at least a half-dozen attempts to enact back-to-school sales tax holidays in the past 25 years, according to a legislative analysis for the Assembly Committee on Revenue and Taxation.

The most recent effort came from District 70 Assembly member Tri Ta of Orange County last year when he introduced AB 1249, which would have made certain school supplies and products tax-free for two days on the third Saturday of July until, 2029.

Items such as notebooks, highlighters, crayons, erasers and other supplies with a price tag of less than $100 — along with the first $1,000 of certain electronics — would have be e n tax exempt for those two days.

The bill was supported by the Los Angeles County Office of Education, which noted that low-income families are more burdened by sales tax because it comprises a disproportionate share of their income.

According to the legislative analysis, Ta said the holiday would also benefit local businesses by providing an incentive to shop locally rather than online.

The bill, however, died without a hearing.

The legislative analysis focused on how the holiday was broad and did not specifically target low- or moderate-income consumers. It also said it would be overly burdensome on retailers.

“Specifically, nothing in this bill requires items to be purchased for use by students,” the analysis states. “If an individual with no children were to purchase a Waterman fountain pen for $95 during the sales tax holiday, that purchase would be exempt under this bill. In addition, under this bill a commercial office manager could purchase a wide array of office supplies for nonschool purposes during this tax holiday.”

The California Federation of Teachers also opposed the bill, echoing committee comments that the tax holiday would not specifically help low-income families.

Matthew Hardy, a federation spokesperson, said the organization was also concerned that a tax holiday would reduce public school funding from Proposition 98, which comes partly through sales-tax revenue.

“There’s an equity focus there — through the local control funding formula — so it takes money out of our schools which we are not thrilled with,” Hardy said. “We are fully in support of policies that support working families … of course we want families to have more money in their pockets but this was not the right mechanism to do that.”

Hundreds of donated backpacks

The Sonoma County Library gives out 750 backpacks to families in need every summer through community partnerships and a series of backpack giveaways at library locations across the county.

More and more elementary schools don’t give homework; they assign required reading time, Education Initiatives Specialist Rachel Icaza said. “Families look at that requirement like, ‘Great — how am I supposed to buy books with the groceries and the school supplies?’ … The library is where you can turn.”

The library is one of many community organization that takes matters into its own hands to hand out free backpacks and school supplies to families in need.

The Redwood Gospel Mission is another: This year, it gave out 620 backpacks to students in need during its annual “City Kids Festival.”

“It's very clear that those who come to the event are those who are struggling economically,” said Executive Director Jeff Gilman. “We hear that over and over again: ‘Without this, I don't know what I would do.’”

Senate President Pro Tem Mike McGuire, D-Healdsburg, raised concerns about what enacting a back-to-school tax holiday would cost the state, adding that California has “invested record funding to help our kids thrive and make our public schools stronger in recent years.”

“This year we are more conscious than ever about state spending,” he said in an emailed statement. “(But) we know there’s more work ahead to help drive down the cost of living for working families and seniors.”

A detailed estimate of the amount of revenue California would lose under Ta’s bill was not available.

The Press Democrat did a rough projection of revenue loss California would incur if it were to enact a back-to-school tax holiday.

Using data from Mississippi, which has both a back-to-school tax holiday and a state sales tax rate close to California’s 7.25%, The Press Democrat calculated that Mississippi’s holiday costs roughly 0.2% of its annual sales tax revenue. Applying that 0.2% in California would translate to roughly $63 million of the state’s more than $33 billion in sales tax revenue.

The calculation doesn’t account for variables, including the differences between California and Mississippi’s economies and populations, but it provides a back-of-the-envelope guesstimate of what a tax holiday would mean for California.

Richard Auxier of the nonpartisan Tax Policy Center think tank in Washington, D.C. argued that states with tax holidays have not faced a “budget crisis” because of them and said the costs are not a major share of their annual budgets.

However he said that while tax holidays are popular among consumers and retailers, there are better policies local governments can pass to aid consumers, specifically low-income households.

“If your policy agenda is supporting low-income families, this (a tax holiday) really doesn’t cut it compared to some other options on the table,” he said.

“ (The savings for consumers) aren’t nearly as much as some of the tax credits that California offers, which could be as high as $1,000 for some residents,” Auxier said. “The savings are always typically small (with tax holidays) because there are limits on what you can buy and it’s not going to be that large a share of your purchase.”

Another argument against tax holidays is that they don’t typically generate much economic activity. Instead, they merely shift consumer spending.

Auxier added that families from different incomes also view sales tax holidays differently. Higher income families are able to shift purchases to a timeline that benefits them, while lower income households might not be able to wait for a tax holiday to make essential purchases.

School supply prices dip slightly following record high year

More money is spent on back-to-school shopping than virtually any other time of the year, even the winter holidays, including Christmas, according to the National Retail Federation. Shoppers have also started shopping as early as mid-July to catch retail sales and save on supplies.

Families with students in elementary through high school planned to spend an average of $874 per household on clothing, shoes, school supplies and electronics. Though it is $15 less than last year’s record $890, it’s the second-highest amount in the survey’s history.

Spending on school supplies dips slightly

Total spending is expected to reach $38.8 billion this year, although down from last year’s record high of $41.5 billion.

Consumer analyst and strategist Phil Rist said in a statement that last year’s record high could be attributed to the record investment in new electronics such as laptops, iPads or cellphones.

“These are typically items students can use for several years, which may be why we are seeing slightly less interest in electronics this year,” he added.

Retail sales continued to grow in July during back-to-school and back-to-college shopping with many shoppers making purchases in accordance with retail sales and promotions. The National Retail Federation and CNBC’s Retail Monitor uses anonymized credit and debit card purchase data compiled by research firm Affinity Solutions to collect its data.

According to the data, total retail sales excluding automobiles and gasoline were up .74% seasonally adjusted month over month and .92% unadjusted year over year in July.

NRF president and CEO Matthew Shay said this proves that consumers are cautious but are still spending on essentials when they find a good deal. July sales were likely bolstered by back to class shopping, which was reflected “in gains for retailers selling everything from clothing and crayons to computers and dorm room furnishings.”

“Labor market trends have softened recently and interest rates remain high, but economic fundamentals are intact and inflation has fallen to nearly zero for goods even though prices for services are elevated,” he said in a news release.

Sonoma County Office of Education Superintendent Amie Carter said that given the burdens families face with back-to-school expenses and the high cost of living in the North Bay, a sales tax holiday could help.

“We know sales taxes have the most impact on lower income and working families with smaller household budgets,” Carter told The Press Democrat in an emailed statement. “Giving these families relief from sales tax as they prepare their students for school is the equivalent of a nearly 10% discount.”

Stacy Desideri, Santa Rosa City Schools’ executive director of wellness and engagement said that district officials often see parents at varying income levels struggling to buy school supplies.

“Over the last few years — some years there’s a lot of need and some where there’s a little less,” said “There are the families who struggle because they have nothing and there are others … who are making decisions about what they prioritize.”

The district ensures that each school has backpacks and supplies on site at the beginning of the school year, often financially supported by individual parent-teacher groups. Desideri also keeps supplies at the district office just in case.

“ (A student) may not be able to have a backpack on Aug. 14, and if a family is asking for support, we’re there,” Desideri said. “We’re not going to go back and check their program or income. If they have a need we're going to fill it and we’re not going to ask why.”

You can reach Staff Writer Sara Edwards at 707-521-5487 or sara.edwards@pressdemocrat. com. On Twitter @sedwards380.

Report For America corps member Adriana Gutierrez covers education and child welfare issues for The Press Democrat. You can reach her at Adriana.Gutierrez@pressdemocrat.com.