Food Taxes Should Die, but Won't

Against all common sense and fairness, some states continue to tax grocery purchases.


Dragonimages /

How much do you pay for food at the grocery store? In some states—thanks to growing discussions about food taxes—you could be paying more money for less food if lawmakers have their way.

What are food taxes? They're particularly odorous and onerous taxes on purchases of food for home preparation and/or consumption from grocery stores and similar establishments. They're distinct from taxes that single out a particular food category—such as soda taxes—and also from taxes on foods sold for immediate consumption by restaurants, which are subject to taxes in most states.

In recent months, several states have proposed new food taxes. Some states have proposed to revive old ones. But others have also moved to repeal or reduce existing taxes.

New Mexico, one of the states considering a food-tax revival, adopted a statewide food tax in the 1930s "as part of a 'temporary' and 'emergency' measure to keep schools open during the Great Depression." The state repealed its "temporary" food tax only in 2004, after earlier efforts under then-Gov. Gary Johnson (and a dozen or so governors before him) fell short.

Since 2004, though, the state has chipped away at the total repeal, and the drumbeat has grown louder among state lawmakers and activists for a partial or total revival of the tax, at a 4 percent rate.

If New Mexico's proposed 4 percent tax seems high, consider that lawmakers in West Virginia—which repealed its own state grocery tax in 2013—recently proposed an 8 percent tax on groceries, which would be the highest in the nation.

Thankfully, not all movement on food taxes in the states is in the wrong direction. In Idaho, recent efforts to repeal the state's existing grocery tax appeared to be floundering, and were given little chance of success. But just yesterday, a coalition of Democrats and Republicans in the state senate voted to repeal the tax. Utah lawmakers rejected a proposal to more than double the state's existing sales tax. And Tennessee lawmakers have taken steps to reduce that state's food tax by 20 percent.

A recent analysis of state grocery taxes by the Center on Budget & Policy Priorities CBPP), a Washington, D.C.-based nonprofit that looks at how federal and state budget decisions impact low-income Americans, found that nearly two-thirds of states exempt most foods from taxation.

But that doesn't tell the whole story. Because many local governments have their own food taxes, notes a Pew Charitable Trusts piece, "people living in more than a third of the nation's roughly 3,000 counties are taxed at some level on the food they buy at the store." The impact of those taxes isn't small peanuts.

"The average (combined) grocery tax rate for the places taxing grocery was 4.3%, which translates to more than $200 for a family with annual grocery bill of $5,000," says a 2016 study by university researchers from Auburn, University of Kentucky, and Cornell.

What makes food taxes so attractive to lawmakers? A Pew piece last year noted the easy allure of food taxes: they "provide a steady source of revenue in volatile times." The same factors that make food taxes so attractive to lawmakers are what make them so odious to many consumers: they're all-but-impossible to avoid. Everyone buys food; food taxes punish everyone who buys food.

Another reason food taxes are unpopular is that while food buyers all pay the same tax rate, the taxes don't punish everyone equally. They're regressive, in that low-income buyers pay a larger percentage of their income for food. Low-income buyers are also less likely or able to frequent discounted membership grocers like Costco—where taxes may be the same but food costs less—or to buy meats and produce at farmers markets, which are exempt from sales taxes in many states.

For these reasons, New Mexico's proposal to revive its food tax has been met with a firestorm of criticism from advocates for poor and low-income consumers in the state. Similar opposition has arisen in Utah and other states.

But problems with food taxes don't end with their regressive nature. Food taxes also hurt small businesses. And then there's the question of the potential negative health impact of food taxes. If healthier food costs more—as many argue—then taxing grocery purchases forces low-income consumers to choose less healthy options.

Food taxes are a lousy idea that hit low-income consumers the hardest. Most states agree. Let's hope those that still tax food—or are considering a revival of their food taxes—come to see the errors of their ways.

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  1. Speaking of banana republics:

    Trump drags key foreign allies into controversy over unproven wiretap claims

    President Trump’s unproven allegation that his predecessor wiretapped Trump Tower in New York ahead of the election blazed a new path of political disruption Friday as he dragged two foreign allies into his increasingly thin argument that he is right.

    Standing next to German Chancellor Angela Merkel at a White House news conference Friday afternoon, Trump declined to express regret for the accusation he tweeted nearly two weeks ago, despite some of the highest-ranking members of his own party saying they have seen no evidence that any such wiretapping occurred. Trump also passed on the opportunity to reject an unfounded report from a Fox News commentator asserting that British intelligence agents were involved in the alleged spying ? even though White House officials had just assured livid British leaders that they would no longer promote the claim.

    Meanwhile, Republican “libertarians” continued to support their Conspiracy Theorist in Chief.

    1. I’m not sure if Trump is being paranoid, with Patriot Act, Snowden, Wikileaks and now Vault 7 in addition to GCHQ having previously been proven to collaborate with the NSA… is he being paranoid or does he just realize the massive amount of surveillance being conducted on US citizens and abroad. Do you really think government officials are immune from being spied on? I’m not saying Trump isn’t full of it and undoubtedly he should tone it down a few notches, however he does have plenty of reasonable suspicions for wiretapping etc just as us average peasants do too.

      1. Why should he turn it down a notch? The Wiretapping charge is transparently a countermove to the ‘Russia hacked the election’ narrative. That narrative is a desperate and sleazy attempt to distract from the content of the ‘Russian’ leaks; that the Democrat establishment hacked (or tried to hack, and got the result they thought they wanted) their own nomination process.

        Trump’s charges have everything; at some level they are almost certainly true – it appears that NSA has been spying on nearly everybody, and if Obumbles didn’t specifically tell them to concentrate on Trump, he was still nominally in charge. The accusations that Trump colluded with the Russians (which are backed by no substantiated evidence I know of) are only believable at all if Trump’s conversations were bugged. The accusations are likely doggy piddle, so the countercharge of wiretapping shuts them down. The accusers are placed in a cleft stick; they an drop the whole thing, or they can move forward with the accusations, have no real evidence that can be brought forward, and ‘admit’ they were eavesdropping on Trump.

        1. cntd.

          Trump may or may not turn out to be a national mistake, but the ‘Trump is paranoid; he thinks we were wiretapping him’ reaction is a flop. Either they have evidence Trump was up to something with the Russians (unlikely, since they’ve been repeating unsupported charges for a while without presenting evidence) which they have to admit came from spying on a Presidential Candidate, or the whole thing is bullshit. And where they expected Trump to just curl up and take it like a good Republican, instead he kicked them in the balls. Good.

        2. Trump is still not playing it to its fullest. Every time the Democrats being up The Russians, he should say, “Are you referring to the leaked emails revealing how the DNC sabotaged one of their own leading candidates?”

          1. I think he hopes they are stupid enough to do it again in 2020.

      2. The burden of proof is on the accuser. General Cheeto watches hours of cable news (mostly Fox) daily, then repeats their foolish, conspiracy-laden propaganda without a shred of evidence. And he refuses to take responsibility for his lies, passing them off to “others” as he passed off his latest conspiracy theory to “Judge” Napolitano. Trump can silence his many critics from the left and the right by providing evidence for his accusations. But he won’t, because he has nothing, as any objective observer can see.

        1. The burden of proof is on the accuser.

          / Title IX

          1. This applies to the people whispering about the Russians as well?

        2. While he certainly did cite Fox several times, did you not see/hear Spicer quote a litany of non-Fox sources, including places like the NYT, who made claims to the effect that there was, to at least some degree, some surveillance on either Trump or his people during the campaign?

          Now… that may all be untrue. That means Trump is wrong in saying he was being spooked on. Fine. It so means that the news is, in fact, “fake.”

          It’s a win/win for Trump. If he was tapped, he wins. If he wasn’t, then the news media loses and he wins.

          And to boot… how do the Dems know he was working with the Russians? Either they made it up or the evidence is the result of creeping on him during the election. So in this case it’s still a win/win for Trump.

          The worst he will look to dispassionate people is generally correct but wrong on the specifics. He will have been spied on butaybe not actually IN Trump Tower and not specifically wire taps (although if you read his tweet, it is obvious he means surveillance in general… in other words he would have been “wire tapped” but not wire tapped).

          1. Yeah this story originated in the NYT describing deep state investigation of activity between a server in Trump Tower and a Russian bank. Turned out to be spambots promoting Trump hotels but supposedly the investigation remained open and a FISA warrant was issued. Could all be fake news but the original source was not right wing conspiracy theorists. Secondly as reported here…..rveillance and elsewhere, Obama ensured that the information would be available throughout spookland virtually guaranteeing that it would be leaked. The spin I heard from a NYT reporter on NPR was that our fine national security professionals were deeply troubled by Russian interference in the election and Obama heroically acted to prevent the evil Trump from destroying the evidence.
            Bottom line is, if you believe the NYT, at the very least a server in Trump Towers was targeted by agencies of the Obama administration and Obama issued an executive order ensuring that any resulting intelligence would ultimately be made public.

            1. So where is Trump’s proof?

              1. You mean… where is the NYT’s proof… seeing as how that is where the story originated.

    2. “Meanwhile, Republican “libertarians” continued to support their Conspiracy Theorist in Chief.”

      Meanwhile, retards continue to whine that the hag lost.

      1. I know. Jesus, guys, you jiggered your own nomination process to nominate a fantastically uncharismatic, shrill, hectoring, criminal bitch. Wasn’t there some less unattractive swine you could have run? No time to get Charlie Manson pardoned and released?

        1. Wasn’t there some less unattractive swine you could have run?

          Fauxcohontas said she wouldn’t run.

          1. Fauxcohontas (I can hardly believe I’m saying this) would have been less repulsive than Shrillary.

            Only slightly, mind.

            1. Thanks for taking that hit for all of us. It had to be said, but nobody wanted be the one to say it.

      2. Suck that Cheeto, Servo, suck it!

        1. Shouldn’t you be talking about how taxing the food for the poor is a good thing since government will take those tax dollars from them and then provide better food for them?

          1. zzzzzzzzzzzzz

      3. I love how the left says that the Russians hacked the election (with no proof and never explaining the “how” of it either) yet completely ignore the actually proven and now admitted interference by Donna Brazil in the election process (screwing Grandpa Stalin in favor of Hillary), as well as the leaking if NBC owned tape from an NBC show on NBC property to a competitor (WashPo I believe). That being the “locker room talk” video. NBC had possession of the tape for years. It was solely their property. Why didn’t they release it when it happened? How did it get out? Why did it get out at the time it did? There is more likely to be “something there there” more so than any of the Russian crap.

    3. Hey Dan-O……after reading your comment I had to scroll back up to the article….just to make sure….

      This is a story about food taxes…..not Trump.

      But, I’m pretty sure….that somewhere on this site….are actual articles about….Donald Trump….

      1. Forget it, tgrondo. It’s Trumptown.

      2. There are no rules in anarchy.

        1. Incorrect. There are no state created laws. But there certainly can be rules.

        2. Well, maybe that’s the problem…..if we had a few more rules….we’d have some order in our anarchy!

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  2. These bottom feeding welfare maggots in line with you at the grocery store are freeloading groceries with an EBT card paid for with the taxes you pay on groceries… that is some shit.

  3. Some years back, Georgia exempted food from its state sales tax but individual counties and cities have their own sales taxes so rates are different depending on where you shop. Then there’s the SPLOST – Special Purpose Local Option Sales Tax – whereby cities and counties raise earmarked funds for specific capital projects* via ballot propositions for a itty bitty teeny tiny “1%” sales tax increase, and idiots fall for that because they don’t understand math and that a 1-cent tax increase on top of the existing 2-cent tax is a 50% tax increase.

    *Theoretically, the SPLOST can only be used for capital projects not part of the normal ongoing local budget – but of course they sneak all kinds of crap in there that’s not supposed to be allowed and nobody ever considers that raising money for building parks and recreation facilities leaves you with the maintenance and operations costs that the SPLOST doesn’t cover. Nobody ever considers the M&O budget.

    1. Which, btw, I don’t have a problem with a general sales tax that covers everything including food. You start exempting food on the grounds that it’s a necessity, you open the door for lobbying to get other “necessities” exempted – like tampons. And what’s the justification for special extra taxes on things like beer and cigarettes other than the same sort of argument for special taxes on anything else that’s unhealthy like sugary drinks and junk food? That’s that central planning and micro-management power-tripping crap that starts you down the slippery slope of the bureaucratic state. With the wide-spread use of computer databases, you can as easily have every single item subject to its own specific tax rate based on some matrix of social costs (controlled by politicians always looking for “public input” by way of campaign contributions, natch) as have three or four different rates. Organic low-salt potato chips cooked in canola oil get a different rate from regular chips cooked in peanut oil. Why not? Every single food company’s gonna be lined up at the statehouse with an envelope full of cash in their hand.

      1. Bingo. But that interferes with the feelz. Thw whole point of having a broad tax base for a consumption tax is that everyone contributes and the rate is generally low if it truly is broad based.

        1. The feels are only good if we can tax rich people more for their food.

          1. But we can. You pay more sales tax on steak than hot dogs.

    2. You are right, people are idiots and cannot do math nor do they understand the gravity of taxation. Recently at my job a few coworkers spazzed over the amount of taxation on their hardworked overtime, I tried to explain to them it is because of the idiots electing these bureaucrats into office, then I try to explain the gist of taxation and how it evolved, their eyes glaze over and they drown me out and do not even attempt to grasp. These people are also on government benefits, they bitch about taxes yet they do not want to give up the benefits they receive on taxpayer dollars.

    3. “Nobody ever considers the M&O budget.”

      Governments love new toys, but hate to pay for upkeep.

      1. Let’s see how much of Trump’s trillion-dollar infrastructure spending goes toward maintenance versus how much goes to building new.

        I’ve got a niece and nephew that are dealing with a 16-year old house right now – we told them when we built it they’d be paying for it several times over the life of that 30-year note, not just the interest but by the time it was paid off they’ll have rebuilt it. It’s ready for a new roof and they want to remodel the kitchen and the bathrooms, already had a new water heater, new heating and air, new flooring, new porch, new appliances, several new paint jobs, it’ll need new siding in a few years – and then it’ll be time to start over again with the water heater I’m sure since most of the materials have a 10, 15, 20-year life expectancy.

        I suspect my niece and nephew have a better appreciation of how much stuff really costs than most politicians do.

        1. ‘skids… also remind them that the price they’re ‘overpaying’ is also why they can live in the house starting NOW and not have to save up the money over the next few decades in order to buy it outright… and also remind them that inflation in the housing market would have forced them to work even longer to buy it outright.

          Meantime, while they’re paying all that extra money, their house, hopefully, will be appreciating in then-current dollars, easing some of the pain if they choose to sell before the note is paid off.

          My First Law: “The Whole World is a Tradeoff.”
          And that’s what they should be understanding.

          You’re welcome.

    4. Consider that the income started at “aww shucks it’s just 1% Uncle Same needs”.

    1. You Crusty’d the link.

      And Balko’s pretty salty about this.

    2. To be fair, how could the editors know. There ain’t a lot of no-knock raids on the Upper East Side or in The Hamptons.

  4. “…last year noted the easy allure of food taxes: they “provide a steady source of revenue in volatile times.”

    They act as a form of enabling for the government. Rather than be fiscally responsible at all times and adhering to simple expense/revenue behaviour, they like to spend money they don’t have for a myriad of reasons as we’ve come to learn over the years.

    All taxes seeking to change behaviour (especially those that are not natural to human activities; think carbon tax) are regressive and inefficient and rarely accomplish what they propose.

    The sole purpose of a tax is to make sure the cash flow keeps rolling.

  5. Ripped straight from the pages of vox and salon.

    I despise this notion of calling a proportional tax ‘regressive.’ Every fairly priced (read uniformly priced) good in the free mkt is regressive by thus definition (yes I know it’s reserved for taxes but ask your wallet if it can tell the difference between a dollar sent to the government and a dollar spent at the store.).

    Using this standard, we should force grocers to change their prices depending on the buyer’s income so that everyone pays exactly the same percentage of their income on food. And electricity. And internet. And transportation. And housing.

    I mean that would only be fair, comrade.

    1. “Regressive” is entirely fair, since the people most pushy about new taxes are the “progressives” who claim to help the poor so much. They’ve corrupted two good words (liberal and progress) and deserve all the scorn possible for being so hypocritical.

      I mean fair as in logical, not as in turnabout is fair play. By their own definitions, a progressive income tax does charge a higher rate for higher brackets. Thus by their own definition, a linear tax IS regressive. They corrupted the meaning, they bought those words, and they deserve to have them used as they themselves have used them.

    2. Ripped straight from the pages of vox and salon.

      Gee, I wonder why it is that two weekend threads don’t even have 100 combined comments yet!

    3. Shit.
      Don’t let Bernie Sanders hear about that idea… 🙁

  6. I like “regressive” taxes. The more “regressive,” and visible to all, the better. It’s the only way to keep them at a reasonable level.

    1. I’d like to see a tax system where they take all the expenditures, divide them evenly by the population, and send everyone a bill at the end of the year. That’s how you get spending cuts.

      1. For added fun, make it an itemized bill.

      2. Wasent that the original way the Feds got cash other than tarrifs?

  7. When I was a child, all grocery sales were taxed by New York, both city & state. Now it’s very few items. So see, some gov’t-related things have improved enormously.

    1. Yeah, basically hot foods are subject to sales tax, and most others aren’t. But they are still taxes on purchases of food for home consumption, and the tax rate is 8.875%, so the statement that a proposed 8% tax would be the highest in the nation is not completely true. Oh, and the tax also applies to certain categories of cold food, like soda. But the category of taxable drinks that includes soda also includes bottled water. Water? Not just in soda-like bottles, but even in gallon jugs.

  8. Glad Florida doesn’t have grocery taxes. However, the bag of Doritos that aren’t taxed at the grocery store magically become something else at the convenience store, because they’re taxed there.

    1. A zillion years ago when I was a kid, I remember reading about some California legislative committee meeting trying to differentiate between food, which should not be taxed, and snacks, which should be. You know those little peanut butter and cracker vending machine products? If it came unassembled, with a little plastic poky thing for spreading the peanut butter after purchase, it was food and untaxed. If it came pre-assembled as peanut butter between crackers, it was a snack and taxed.

      One of many childhood experiences which convinced me government was an incompetent boondoggle populated by blowhards. It was only later that I realized I had also thought up self-ownership on my own, which I think is a very natural philosophy, the stamping-out of which is the primary purpose of organized schooling, whether it be government or church.

  9. Receipts should show all taxes included in the price… as well as all taxes paid by the seller in the last accounting period.

    There’s no law against including additional information in receipts, right?

    1. Liquor stores should be the first to do this.

      1. Gas pumps as well.

    2. Quite a few SF restaurants show the “Healthy SF” tax separately on the bill. We’ve begun having dinners out of SF; the difference (that tax, m/w, family benes, etc) is quite visible.

    3. I believe both phone companies and airlines were the specific targets of laws and court rulings which prevented them from breaking prices out down to individual taxes.

      1. Here in Europe, a seller is normally required to disclose the VAT but not required to / prohibited from disclosing anything beyond that.

        In any case… if someone started to print FYI: we also paid X$ of Y last year on their receipts, how could one stop them?

    4. There’s something now called a ‘gross receipts’ tax which is the same as a sales tax, but it’s illegal to ‘pass on’ to the customer (as if it were possible not to) i.e. you can’t list it on the receipt, or tell the customer about it.

      1. How in the world does a law that says, “you can’t tell your customers about this tax,” pass constitutional muster?

        1. FYTW Clause

          1. So, Interstate Commerce?

            “Well, if people knew how hard we were screwing them, they might start bootlegging hamburger buns across state lines.”

    5. Yup. Excellent idea. All tax information should be included and broken down for everyone to easily access.

  10. Some slaver on CNN talking about how we need to increase the budget for drug treatment and the thing pays for itself because drug addiction “costs” society $442 billion in healthcare costs, criminal justice costs, and lost productivity. The first two are costs the government creates for itself and screw “society’s” costs – legalize drugs and refuse to pay for somebody else’s self-inflicted health harms and those two concerns are gone – but the third is the one that gets me foaming at the mouth. Lost productivity is a cost to society only if you accept the “not giving is taking” premise that the individual exists to benefit society and has an obligation to produce a certain level of benefit to society. My being a drug addict or an idiot or just plain lazy is in no way a cost to society just because I’m not living up to my potential and contributing as much as I could to society. I am not your slave, asshole.

    1. The idea of “lost productivity” is also behind seatbelt laws, motorcycle helmet laws and all that nanny state shit. You ain’t allowed to kill yourself too soon.

    2. It is infuriating to watch these idiots, if someone is stupid enough to inject or ingest or however they do heroin then that’s their choice, I could give two shits less if they want to do that. Legalization would be the best route. Consistent dosing from reputable companies would cut overdoses down dramatically because companies would have to compete to provide the best services and value to customers – compare that to Street heroin where from one week to the next you don’t know what the new batch of H is going to be cut with or the potency fluctuations. If it was legalized companies could also use courts to settle legal matters instead of battling it out on the streets. So many incentives but you know they don’t want to gut the DEA.

      1. Maybe after a decade or 2 of legal marijuana, people will notice the sky didn’t fall in, & it’ll spread to some other drugs. They’ll have to be popular drugs, though, or there won’t be enough push behind it. So if you want legal narcotics, best thing would be to promote it a lot to the point where most people at least have tried them. That may happen when the popul’n ages & needs them for pain.

      2. How would they calculate settlements and lawsuits without lost productivity assumption? If you are injured on the job, you collect based upon lost productivity.

  11. The feds get all of the hate, but S&L govs deserve at least as much if not more. Taxing food is evil.

  12. This is an area where the government in my state (KS) totally deserves their country club Republican reputation. In some areas taxes on food add up to 10%. Of course the local left is too fucking retarded to say much about it, preferring to focus on important issues such as arts funding

    1. Proof their isn’t much of a difference between the two parties.

      1. Some here forget that

  13. Why Won’t Food Taxes Die?


    *drops mic

  14. If a sales tax is to exist at all it should be, low, flat, apply to all products at retail sale. No sin taxes, carveouts, exemptions for Indians or farmers etc.

  15. Eat, and be eaten.

  16. When I lived in Florida, regular food from the grocery store wasn’t taxed. But if you bought something cooked from the deli in a grocery store, that was taxed.

  17. Is this where I come for faux outrage about Paul Ryan’s beer?

  18. Nothing else happened.

  19. “Food tax hits poor hardest” not the most libertarian argument one can make.

    1. It’s the softer, gentler Reason.

      1. Libertarians don’t do kind, they do soft.

  20. Quite surprisingly, grocery food is not taxed in my ultra-blue home state of MA. Of course, everything else is…

  21. Food taxes will die when politicians give a damn about their constituents. Or just after the revolution, whichever comes first. (been waiting since the sixties)

  22. Against all common sense and fairness, some states continue to tax grocery purchases.

    That’s an idiotic argument to make for a libertarian. States, after all, also tax income, and revenue from business, both of which also hurts the poor. And if I’m poor and grow my own food, you’re going to tax me on gardening stuff, but encourage me to buy store grown food? Where is the sense in that? How about not taxing stuff I buy to build a new business for myself to earn more money so that I get out of poverty?

    You’re thinking like a progressive, trying to pick and choose which goods are good for people and which ones aren’t. And what you actually favor with your tax policy is… poverty, namely by making it cheaper for people to stay in poverty, and taxing the goods and services that people need when they get out of poverty.

    The correct thing to do is to reduce all taxes greatly, but otherwise tax people uniformly, for all goods and all incomes.

  23. or to buy meats and produce at farmers markets, which are exempt from sales taxes in many states.

    Interesting how the shi shi, virtue signaling pastimes of the NPR crowd always find themselves with special privileges and exclusions.

    You can drive in your government subsidized Prius, down the HOV/Electric vehicle lane on the highway, to your sales tax excluded farmers markets, all the while listening to your government subsidized Leftist propaganda on the radio.

  24. Well, I hate to go off on a tangent and NOT talk about Trump, but if any of you remember the original subject of the article, here’s my comment on THAT…

    I don’t have a date-stamp on it, but this is exactly the subject of my 33rd Law…

    Falk’s Thirty-Third Law:
    “The Only Criterion for putting a Tax on something is that the “something” must be Measurable. No other reason is necessary.”

    You will never find any other explanation which explains so rationally and succinctly why anything is taxed.

    If it can be measured, it’s a target for someone in Government to find a justification to tax it.

    Remember the Boston Tea Party? “Taxation Without Representation”?

    Now consider the Inheritance Tax. [a.k.a., “Estate Taxes”] …
    If that’s not the ultimate “Taxation Without Representation,” what is?

    You’re welcome.

    1. There should be a corollary which would state that there must be a mechanism to vote out the officials who installed the tax. Sadly, many taxes come out of obscure, unelected boards where you have to go two or even three layers before you can find a diffuse tidbit of elected responsibility.

  25. Food taxes may be unfair, but they make some economic sense. The more inelastic the demand, the less consumers can avoid the tax by reducing consumption. Of course, in this case, the tax would also have to be on restaurant food.

  26. The article doesn’t delve into whether a low tax rate that taxed everything is better or worse than a higher tax that taxes some things and exempts others like food. One can argue that a lower tax on all is neutral because it doesn’t incline consumers one way or another. How do we evaluate whether a 4% tax on everything is better or worse than a 6% tax on some things exempting the usual food, children’s clothing, and many services like dry cleaning that are tax-free?

  27. If there is going to be a sales tax (which is a debate we certainly can have) it should be broad-based and apply to everything. When you start layering on exceptions (and exempting food is certainly an exception) it creates yet another avenue for political corruption, as special interests compete to have their pet product exempted. Furthermore, the necessary end result is higher taxes on everything not exempt (assuming the same revenue goal).

    In my state (SC) there are actually more exemptions than there are products subject to the tax. The legislature is currently considering exempting Port-a-Potty rentals. Why? Because some politically-connected person in that industry thinks it will give him some sort of competitive advantage. (I can’t see it, but clearly he does.)

    Sales taxes are necessarily regressive; that’s not an argument against them (or at least, it’s not a libertarian argument, although it might be a populist one). Better to spread the pain as broadly as possible. Exempt nothing.

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