4: Debt Peonage and Primitive Accumulation

As I write this in early August, it is a sales tax holiday in Texas, my home state. In total, 18 states in the United States have sales tax holidays this time of year. Why do so many states suspend their sales tax in late summer? Back-to-school shopping! As parents get ready to send their kids to school, they often go into debt to do so. According to one survey, one-third of American parents go into debt to buy school supplies and new clothes and the amount of debt has risen over the past three years.¹ Why do so many people go into debt sending their kids back-to-school? First, there is an ever-increasing list of school supplies required by schools from pencils to hand sanitizer, and notebooks to headphones. Second, all parents want their kids looking good when they go to school, so they go to department stores to buy clothes and shoes. Whether it's fair or not, kids are judged by their classmates on how they look on the first day of school. The problem is parents do not plan for this spending. They get the school supply list and head to the store. The real debt piles on when parents go to buy clothes. At checkout, stores (especially department stores) offer credit cards to customers. These credit cards usually come with awards and discounts, too. Often, when parents receive the credit card, they decide to buy even more clothing because they do not have to pay for it now. This is a different experience from the holiday season when people budget their shopping and occasionally receive bonuses.