EXPERT AVAILABLE: MU Financial Expert Encourages Families to Take Advantage of Back-to-School Money-Saving Opportunities
Aug. 04, 2011
Nathan Hurst, firstname.lastname@example.org, 573-882-6217
The views and opinions expressed in this “for expert comment” release are based on research and/or opinions of the researcher(s) and/or faculty member(s) and do not reflect the University’s official stance.
By Kate McIntyre
COLUMBIA, Mo. – Families with children in grades K-12 will spend an average of more than $600 on clothes, supplies and electronics to prepare for the upcoming school year, according to the National Retail Federation. A University of Missouri personal financial planning expert says families can save money on back-to-school gear by taking advantage of the sales tax holiday this weekend and employing other simple strategies.
Missouri law provides a small break on certain school-related purchases annually during the first weekend in August. This year, the sales tax holiday for back-to-school items begins Friday, Aug. 5 and ends at midnight on Sunday, Aug. 7. Shoppers can save on clothes or shoes worth less than $100 per item, up to $50 per purchase of school supplies, computer software worth $350 or less, personal computers worth up to $3,500, and computer peripheral devices such as scanners, disk drives and speakers, not to exceed $3,500. Brenda Procter, state extension specialist in the MU College of Human Environmental Sciences, says that while the tax holiday can help a little, it isn’t a lifesaver for low-income families and can cost the state money in lost revenue.
“The sales tax holiday is little relief for families in the bottom 20 percent of income earners, who earn less than $17,000 annually,” Procter says. “It’s a three-day break from a long year of sales tax charges that low-income families pay. The sales tax holiday also has a real cost to the state. Illinois dropped their sales tax holiday this year because they did not want to lose the revenue.”
Procter says people in the bottom 20 percent of income earners pay about 9.6 percent of their income in total taxes when sales, excise, property and income taxes are taken into account. In contrast, income earners in the top 1 percent who earn on average $1.2 million per year pay taxes at a rate of 5.4 percent.
“Low-income families will save a small amount on whatever back-to-school items they can afford, but they still pay a higher total rate than other income groups in Missouri,” Procter says. “The savings from this one weekend won’t make up for the differences in income tax rates; however, they might as well take advantage of the opportunity.”
In addition to purchasing eligible items during the sales tax holiday weekend, Procter says families can find free supplies at community back-to-school fairs, churches or Community Action agencies. She recommends caregivers visit: http://www.extension.org/pages/29760/a-dozen-ways-to-stretch-your-back-to-school-budget for more money-saving tips such as setting a budget, knowing dress code policies and inventorying items children already have before shopping. Procter also recommends checking for deals at department and office supply stores or thrift shops.
To learn more about which items are eligible for sales tax exemption and which counties and municipalities are participating, visit the Missouri Department of Revenue website: http://dor.mo.gov/business/sales/taxholiday/school/.