States 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.
Agarwal, Sumit, Nathan Marwell, and Leslie McGranahan.
"Consumption Responses to Temporary Tax Incentives: Evidence from State Sales Tax Holidays."
American Economic Journal: Economic Policy,
Consumer Economics: Empirical Analysis
Business Taxes and Subsidies including sales and value-added (VAT)
Fiscal Policies and Behavior of Economic Agents: Household
State and Local Taxation, Subsidies, and Revenue