Tax Exemption For Halloween Costumes Costs New Jersey Revenue

Tonight, Americans all over the country will don capes and masks to celebrate Halloween, hitting the streets to trick-or-treat or heading out to costume parties. For Halloween revelers in New Jersey, the holiday has been just a bit cheaper for the last six years — and therefore more expensive for the government — due to a law removing the state’s sales tax from Halloween costumes:

For the past six years, adults looking to buy a Halloween costume in New Jersey have avoided a 7 percent sales tax because of a law that took effect in October 2005 classifying the outfits as “clothing,” which is tax-exempt.

Michael Froumy, 54, of Brigantine, owner of Fro Me A Party in Egg Harbor Township, said that change has saved shoppers at his party-supply store between $7,000 and $8,000 annually. But he wonders if the state should really be giving a tax break on vampire capes and sexy French maid costumes.

Even before the 2005 law took effect, childrens’ costumes were tax-exempt in New Jersey. Deborah Howlett, president of New Jersey Policy Perspective, said that while it makes sense to exempt food and clothing from sales taxes, “when it gets to the point when they are not taxing Dracula capes, that might be a chance to revisit things.” It is unclear how much the state loses each year in revenue from the tax break.

This is only the latest instance of an unwarranted Jersey tax break coming to light. Just last month, Gov. Chris Christie (R) found himself having to veto a $420,000 tax credit that was awarded to MTV’s Jersey Shore. “As chief executive I am duty-bound to ensure that taxpayers are not footing a $420,000 bill for a project which does nothing more than perpetuate misconceptions about the state and its citizens,” Christie said. Evidently, MTV’s crew will have to hit a local costume shop in order to catch a break on their Garden State taxes.

(HT: Citizens for Tax Justice)