Education

Back-to-school shoppers: Hunting for tax breaks and bargains

Retailers are optimistic about back-to-school sales because the job market has been strengthening and gas prices have been falling.
Retailers are optimistic about back-to-school sales because the job market has been strengthening and gas prices have been falling.
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For millions of Americans, August is a month for relaxing and basking in the summer sunlight.

Those are the people without children.

The households with students are likely to be scurrying around under the bright florescent lights of big-box stores, searching for back-to-school bargains on clothes, shoes, notebooks, backpacks, computers and dorm furniture.

And many shoppers are timing their purchases to take advantage of sales-tax holidays for school-related items, hoping to keep a bit more in their wallets.

"They love it," National Retail Federation spokesman Craig Shearman said of the tax breaks. "There's a psychological impact that goes far beyond the amount of money involved."

The National Retail Federation predicts families with K-12 students will spend an average of $670 on classroom supplies and school-age apparel this season. That's about 5 percent more than in 2013's July-through-September retail season.

But forecasting is a tricky business because the U.S. economy remains so uneven, giving off conflicting signals. These are some reasons why sales may turn out to be stronger than expected:

But many analysts see reasons for lowered expectations, including these:

Given that many shoppers still face stiff economic headwinds, retailers in 17 states push their lawmakers to continue offering sales tax holidays. Typically, the tax breaks cover a broad array of school-related items, from shoes to crayons, and last from a weekend to a full week. Retailers say they are popular with shoppers who appreciate the tax relief.

But in the past couple of years, a few states have dropped the holidays to help keep state coffers full. For example, North Carolina ended its back-to-school tax break this year as part of an overall tax reform program.

Republican state Rep. John Szoka, one of the bill's sponsors, said taxpayers were, in effect, subsidizing retailers' advertising. He says retailers in his hometown of Fayetteville are offering big discounts to attract shoppers, so they don't need help from the state.

"Sales-tax incentive on top of a sale like that isn't going to spur someone to go and buy something," Szoka said.

The Tax Foundation, a nonpartisan research group, says the tax holidays don't make a difference for total sales, but only shift which weekend customers might shop. "Consumers are buying what they would have bought anyway, but just doing it at a different time," said Liz Malm, an economist with the foundation.

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