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1 Jared Walczak, The Surprising Regressivity of Grocery Tax Exemptions 1 (2022)

handle is hein.taxfoundation/surregrer0001 and id is 1 raw text is: The Surprising Regressivity of Grocery Tax Exemptions FISCAL Jared Walczak Vice President of State Projects FACT No. 789 Apr. 2022 Key Findings • Exempting groceries from the sales tax base reduces economic efficiency without achieving its objective of enhancing tax progressivity. • The poorest decile of households experience 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. • Grocery tax credits provide actual progressivity at a lower cost than the broad exemption of groceries. Under a revenue-neutral expansion paired with a $75 per person credit, the poorest decile of households would save 31 percent on sales tax liability. • Sales taxes are more stable and pro-growth than many other forms of taxation, especially income taxes, so policymakers have an opportunity to increase tax progressivity, enhance revenue stability, and improve economic competitiveness by taxing groceries, providing a credit, and using the remaining revenue from base broadening to cut income taxes. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2022 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org

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