Clean Up on the Grocery Tax Aisle

Clean Up on the Grocery Tax Aisle

Jun 09, 2022

THE TAX FOUNDATION

Amidst soaring inflation, policymakers across the political spectrum proposed many ideas to soften the blow of higher prices—especially for low-income workers and families.

  • One idea that caught on quickly: sales tax relief on groceries. While the idea had its merits, recent Tax Foundation analysis shows that it may have missed the mark.

Price check on aisle 5: The poorest decile of households actually experiences 9 percent more sales tax liability with a grocery tax exemption than they would if groceries were taxed and the general rate were reduced commensurately.

Credit where credit's due: The time has come for lawmakers to rethink the grocery tax exemption. Grocery tax credits provide actual progressivity at a lower cost than the broad exemption of groceries.

Hear from the experts: V.P. of state projects Jared Walczak joins Jesse Solis this week on The Deduction podcast to discuss how grocery sales tax relief became a popular idea, and why it's so difficult to nail down progressive vs. regressive tax policy. Listen now.

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