Shifting Gun Sales in Texas

A Texas legislator has proposed exempting handguns from the 6.25 percent state sales tax on March 2, Texas Independence Day.  He claims this will create jobs.

It is likely that this brilliant idea will increase total gun sales, as reducing the net price of guns will increase the quantity demanded.  But it would also shift gun sales away from most other days in the year.  I would bet that employers of gun shops would in the long run cut employment and rely on overtime and temporary workers around March 2.  It’s not clear that retail jobs would be created.  Jobs in gun manufacturing would increase as production increases, but that wouldn’t help Texas very much, since most guns sold in Texas aren’t produced here.  Of course, one also wonders whether more guns in Texas will add to our safety!


Dave F.

Whether more guns in Texas will add (or from the tone) detract from our safety really seems to depend more on who is buying those guns and what types they are purchasing. If it is rural and suburban gun-enthusiasts worried about their second amendment rights, the data indicates this won't cause a real increase in murders. Only 3.5% of gun deaths happen with rifles, and the vast majority of them happen in large urban areas.

I don't think a one-day sales tax exemption for guns is a reasonable or logical idea, though. I also wonder how much the base price will change in anticipation of independence day, as I can see shop owners raising gun prices in anticipation of gun shoppers who are motivated to buy.

James

Don't know if this is correlation or causation, but I live in a rural area, most if not all of my neighbors own guns, and I can't remember the last time I bothered to lock my front door.

Enter your name...

It sounds like someone needs to explain the difference between "short term" and "long term" to the legislator. A one-day cut in sales tax is not going to produce long-term jobs.

Taylor

That is if economics were a concept that could be understood by a bureaucrat.

Brian

The legislator was referring to homicide detective jobs, not retail. ;)

Matt

Everyone seemed to think "Cash for Clunkers" was a boost to the economy, so why wouldn't this do the same on a smaller scale?

James

Maybe it would, if it involved trading in that old Colt six-shooter for a new Glock, or whatever is SOTA in firearms these days.

Eric M. Jones

I hoping we can arm our drone-lite R/C helicopter, so it can patrol around our bunker.

Angel S

*Texas Sales tax is 8.25%

J1

The state sales tax is 6.25%. Anything above that was added locally.

Paul in VA

It seems very apparent that both Daniel and this TX-legislator are distorting their Economics consideration to fit thier Politics. A one day tax relief is not going to have ANY notable effect on a long term thing like Jobs either in a positive or Negative direction. In VA there is a sales tax holiday every August for parents buying back to school supplies. Same for some states for things like "Hurricane preparation kits" in early summer. No company is Hiring or firing based on blips like this. I do note that neither the legislator or Daniel or appear to be gainfully employed in the manufacture of anything.

I rather expect warped economic analysis from Politicians. But it is disappointing to see this type of distortion from Daniel, and speaks to the inability of some to never be able to have an actually objective consideration.

The discussion is not really worthy of anyone's time to even read it, except as a reader and fan to advise Dubner and Levitt that I expect more from the website beyond a forum for the official contributors to make thier political points. You are eroding your "Freakanomics Brand" if you allow this to become political. The idea of Freakanomics is "the hidden side of everything", not "how everything supports one political view" .

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WCobb

I think you underestimate the number of firearm companies in Texas. Bond Arms, STI (the only employee owned firearms manufacturer), SVI (Infinity), Cimmaron, Wild West Guns, American Derringer, Maverick, Shilen.

Most of those produce handguns, so most would be affected. Also nearly all of them are most likely already at near maximum production capacity with recent events.

Also it's quite, unreasonable to believe that a one day spike in sales will lead to any employment changes, and may possibly, but unlikely, lead to any production changes. Even at maximum order taking capacity a company can only sell so many, even preloading their inventory with the perfect allotment of guns it still takes 1 employee 15 to 30 minutes to run a transaction of a handgun. Cabela's is probably the most efficient and it still takes them probably 10 minutes/employee/gun.

Those kinds of numbers just simply won't shift production in any meaningful fashion because you cannot simply sell that many guns that quickly, even with the most recent events it took suppliers weeks to sell guns, and gun companies have only been growing recently.

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James

If the goal was really to boost Texas jobs, I'd think a more effective way to do that would be a sales tax exemption for made in Texas guns.

Paul in VA

It 's probably illegal for some "interstate commerce" reason, but this is a very intriguing idea for many things beyond guns in Texas.

Imagine the effect for each state to exempt products manufactured in-state from the state sales tax. It would seem that a lot, if not all, "lost revenue" is made up by additional employment (payroll tax) and corporate taxes, while giving people a reason to purchase in-state manufactured goods.