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Food to cost more, harming poorest

May 17th, 2010 · 2 Comments · Public policy and food

money bag illustrationBesides the perhaps inevitable inching up of food prices, we can now count on spending an additional 1 percent on our food through sales taxes, thanks to a sales tax increase approved last week. Unfortunately, our spineless “conservative” legislators would rather gouge you and me than raise the income tax or eliminate some exemptions granted to businesses (such as laundry services and lottery tickets) and to nonprofits. (Here’s the official list of exempted nonprofits; I haven’t found a convenient list of the business exemptions, but you can wade through Senate Bill 476 [PDF] to identify them.)

Most states exempt food from sales taxes (see report from the Federation of Tax Administrators [PDF]). Although Kansas does provide a mechanism for poor people to get some relief from that tax on their income tax filings, the sales tax on food harms middle and low income people the most, because they spend a larger share of their income on food than wealthier people. A 2006 report at the Kansas Department of Revenue by John D. Wong of Wichita State noted:

For 2003, the effective consumer sales tax rate for the lowest income group was 16.5 percent, compared to the rate for the highest income group of 2.3 percent.

The new tax will only exacerbate that situation. Poor people also pay significantly higher proportions of their income on property taxes. When you combine all three taxes (sales, property and income), Wong found, the poorest people pay the largest share, and the richest pay the smallest share of their income in taxes:

The lowest income group (under $10,000) paid 32.7 percent of income in taxes. The effective tax rates decreased slightly for the middle-range of households, ranging from 14.6 percent to 7.6 percent. These households had income between $10,000 and $199,000. The highest income group($200,000 and over), paid 7.7 percent of income in taxes. The combined average effective tax rate for the state as a whole is 9.2 percent.

I suppose this is old news, but it’s depressing that the pols don’t just get away with it; they make it worse during hard financial times.

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2 Comments so far ↓

  • Jennifer

    Poor people, but only if they’re disabled/blind, over 55, and have kids. Any other poor people are sol.

  • Janet Majure

    Thanks, Jennifer. I tried to read the rules on the sales tax reimbursement option which, no surprise, are reasonably impregnable. I suspect few poor people, even with the appropriate qualifiers, get the help.