Wednesday, July 27, 2016

Member in the News: Norbert Wilson

Taxes on Groceries, Not Soda, Are Hurting Poor Americans

Grocery purchases are taxed in 16 states, and the extra cost hits hungry Americans the hardest.
Soda taxes are continuing to bubble up throughout the United States. After Berkeley, California’s soda tax brought in $1.2 million in revenue in its first months, cash-strapped Philadelphia passed a 1.5 cent–per–liter tax in June. In November, several other cities will vote on their own measures, including San Francisco (again) and Boulder, Colorado.

But while soda taxes have proved to be effective both in generating revenue and reducing sugar-sweetened-beverage consumption, not all taxes are created equal. New research suggests that taxing all groceries, as some states and counties do, puts additional pressure on food-insecure households.

Sixteen states have a grocery tax at a state or local level. Such a tax can “cost families hundreds of dollars per year,” according to a recent paper called “Do Grocery Food Sales Taxes Cause Food Insecurity?” Researchers from Auburn University, Cornell University, and the University of Kentucky found that the average rate for these taxes was 4.3 percent. While a extra few dollars per grocery run may not seem like much, for people living off incomes at and around the federal poverty line—just over $2,000 a month for a family of four—a small cost increase is a big deal. A 2013 study found that a $10 increase in food costs for a household receiving benefits from the Supplemental Nutrition Assistance Program (as food stamps are known) can raise the prevalence of food insecurity by 2.7 percent overall. In January, 22.3 million households were receiving SNAP benefits. That small increase would mean an additional 602,100 households would face food insecurity even while receiving government assistance.

It may seem obvious that anything that raises costs could pose financial difficulties for people with little money to spare. Yet, lead author Norbert Wilson said, the argument in favor of grocery taxes is often that the tax is insignificant. But for families struggling to get by, what seems insignificant can look a whole lot different. As incomes rise, the percent of income spent on food shrinks. Only 13.4 percent of total income is spent on food among middle-income citizens, while the poorest spend 34.1 percent on food, or $3,667 per year, according to the USDA.

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