Tomorrow and Saturday are the days of Iowa's back-to-school tax free days. Calling them tax free days, as many stores do, is a bit misleading. The only things that are sold without sales tax, in addition to things that normally do not have sales tax, are articles of clothing priced at under $100. This sounds like it could be a really good deal, but the savings don't necessarily add up to all that much. In locations where the sales tax rate is 5%, buying clothes tax free results in a net savings of about 4.8% (not 5% as some journalists would have you believe). Instead of paying $105 for a $100 purchase, the final price would be just $100, a savings of $5 out of $105, which is slightly less than 5%. Anyway, I wonder how many people would rush out to a store if they were having a sale where clothes was a whole 4.8% off, or even 6.5% (the amount of savings in parts of the state where sales tax is 7%) off.
Now I have bought clothing on the so called tax-free weekend before, only to find store have better sales the next weekend when sales tax was again being charged. By buying clothes during the tax-free weekend, I actually ended up spending more money than I would have if I had waited a week. I guess the feeling of sticking it to the state is appealing to some, but I for one would look for the better deal.
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