Title: Sales Taxation of Food: From the Great Depression to the Streamlined Sales Tax Project [redacted version] (2007 Third Year Paper)
Author(s): Patricia Chen
Subject & Subject keywords: Food and Drug Law "" "sales tax"
Abstract:Over 45 states and the District of Columbia impose retail sales taxes. Of this number, 40 states and the District of Columbia have enacted some type of special treatment for foods: usually either an exemption, lower tax rate, or refundable food sales tax credit. In five states, taxes on food for home consumption are now forbidden in their state constitution. While economists tend to prefer credits over exemptions or lower tax rates, most of the states that enacted credits have repealed them in favor of exemptions. Exempting food is widely seen as a response to the regressivity of the sales tax and a way to relieve the tax burden on the poor. However, it is weakly targeted to low-income families, results in significant revenue loss to states, and can result in other tax rate raises or program cuts that may actually increase the overall tax burden on the poor.