Report: Grocery Taxes Impede Food Security for Low-income Americans

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About two-thirds of all U.S. counties tax grocery foods, which creates “serious burdens” for the families living at or below the poverty line, according to a Cornell University study.

Grocery taxes increase the likelihood of food insecurity among Americans, especially those living at or below the poverty line, according to a study released by Cornell University. 

Grocery taxes that rise by just one percentage point lead to a higher risk of hunger in low-income households, the study says. The research focuses on sales taxes on foods at retail outlets such as grocery and convenience stores but not at restaurants.

About 17 states impose grocery food taxes, and several states are debating whether to remove or impose such taxes. The report notes that, across 14 states, the average grocery tax is just over 4%.

For households living at or near the poverty level, these taxes represent a significant portion of their household income, according to the study. Alabama, where the grocery tax rate is as high as 9% and the average annual grocery taxes are $630 per household, was used as an example of the negative financial effects of grocery taxes. 

The study’s authors predict if grocery taxes were removed, food insecurity for households with an annual income of less than $30,000 would drop by 3.2%.

“An increase of 1% to 4% may sound small, but after several trips to the grocery store, the extra costs can create serious burdens for the lowest-income families,” says co-author Harry Kaiser, the Cornell professor of applied economics and management. “We found that even the slightest increase in tax rate correlated to an increased likelihood of food insecurity.”

The study examines data from low-income households in the 48 contiguous states plus Washington D.C. The threshold was based on the federal poverty level, a measure that accounts for household income relative to household size, according to the authors. Households with annual income above $30,000 were excluded from the sample.

Data for the “Putting Grocery Food Taxes on the Table: Evidence for Food Security Policy-Makers” study was obtained by merging tax rate information from 2006 through 2017 with data from the Current Population Survey Food Security Supplement.

To find out more about the study click here.

Brent Woodie is an associate editor at Route Fifty.

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