November 6, 2001

A Federally Financed Sales Tax Holiday Would Be Difficult
To Implement and Would Have Limited Stimulus Effect

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On November 6, the Center on Budget and Policy Priorities released an analysis of the National Retail Federation proposal that the federal government stimulate the economy by financing a temporary reduction or elimination of state sales taxes. While superficially appealing, a national sales tax holiday has a number of significant problems that would prevent it from being implemented in a timely manner and would sharply limit its effectiveness.