Exempting Groceries from Tax Is Feel Good Bad Policy

Exempting Groceries from Tax Is Feel Good Bad Policy

My friends at Roth & Company - the preeminent CPA firm in Iowa - posted a chart on their Tax Update Blog showing which states tax groceries. Actually the chart is from the Tax Foundation. I was shocked to see how many states completely exempt groceries from sales tax (32) and how many tax at reduced rates (7). Only 6 six state fully tax groceries. Liberals like exempting groceries because it eases their conscience about having money. But I suspect that it is grocery stores that really like the exemption. There are no economic or tax reasons for such an exemption. Indeed, sound tax policy requires groceries to be treated like any other personal consumption.

View TaxAnalysts'® Davud Brunori's opinion in its entirety on TAX.com.


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