Search This Blog

Sunday, April 23, 2017

Idaho Keeps Sales Tax On Groceries

Many states exempt groceries from sales tax per the premise that food is a necessity of life. This is a poorly targeted exemption though in terms of helping low-income taxpayers. Higher income individuals spend more on food so get the bulk of the tax savings. If instead, groceries were taxed, tax relief could be better targeted to the taxpayers who need it via a refundable income tax credit based on income.

Idaho subjects groceries to sales tax, but offers a grocery credit on the personal income tax returns. The only variation in the amount of the credit is that it is $120 per year rather than $100 if the individual is age 65 or older. So, it is poorly targeted and includes the out-dated assumption that senior citizens have financial needs (not all do).

Recent legislative activity in Idaho called for repeal of the sales tax on groceries. The governor vetoed this effort due to the revenue loss and the fact that a refundable income tax credit exists to reduce the burden of the tax.

I have more in this blog post at SalesTaxSupport.com.  Please take a look.

What do you think?  Should all states tax groceries and provide a refundable income tax credit based on need?  Many states already provide an Earned Income Tax credit, so low-income individuals are already filing in most states even if they owe no personal income tax.


1 comment:

shiwani said...

Very nice and wise collection of words to describe the importance of topic.
Very grateful for this clearly written information! Thanks..