More Tax Breaks for the Rich?
I was talking with some folks at LSU who were working on a proposal to exempt textbooks from sales taxes in Baton Rouge, currently a whopping 9 percent. I’m all in favor of cutting sales taxes, which are generally not progressive; but textbooks are a luxury good because college education is disproportionately undertaken by the offspring of higher-income families. Why subsidize higher-income college students still further?
The elasticity of demand for textbooks is probably quite small; profs assign the same number of textbooks and students used to buy them locally. With more students purchasing textbooks online today, the elasticity is probably much higher locally. There was little excess burden before; and with the expansion of the Internet the burden is still small, since people can escape the tax with minimal effort.