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.