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March 13, 2013


Sales tax exemptions: states take different approaches

Tax exemptions, like so many other things in life, come in sizes large and small. For large corporations and wealth individual taxpayers, the tax savings involved in properly claiming exemptions amount to some serious money.

That is why tax litigation in Texas and across the country sometimes focuses on issues involving exemptions on state or federal taxes.

No matter the amount at stake, however, tax exemptions are significant. After all, no one wants to pay more tax than he or she really has to.

And so, for this week’s post, we turn to a tale from Idaho about the taxation of Girl Scout cookies. Idaho is a small state in population. It has only 1.5 million people – a mere fraction of the 26 million that Texas has.

Yet even in such a small state, Girl Scout cookie sales can really add up. The estimated figure is $2.5 million. And those sales yield about $140,000 in sales tax revenue for Idaho state government.

Legislators are considering changing this, however, by providing a tax exemption for the coveted cookies.

One legislator who voted for the proposal said it would also be good to review the application of sales taxes across the board. At present, there are host of goods, including such things as funeral caskets and commercial aircraft, not subject to sales tax.

This results from the fact that legislatures often put tax exemptions into the tax code one at a time. A review of the principles involved in taxing one activity rather than another, or more than another, is often not undertaken at all.

Source: “Idaho Girl Scout Cookie Tax Exemption Clears Its First Hurdle,” State Impact, Emilie Ritter Saunders, 3-11-13