Which States Tax Groceries?

The Tax Foundation is often asked which states exempt certain items from their general sales taxes, especially as they relate to food. The following is a list of the states that do tax groceries, and if applicable, which ones apply a special rate on grocery items. All other states do not tax groceries.
 
States that tax groceries (rate if not fully taxed): Alabama, Arkansas (3%), Hawaii, Idaho, Illinois (1%), Kansas, Mississippi, Missouri (1.225%), Oklahoma, South Dakota, Tennessee (5.5%), Utah (1.75%), Virginia (1.5% + 1% local option tax), and West Virginia (5%).

Notes: Idaho's income tax provides a $20 credit per person that is designed to partially offset the impact of taxing groceries. Also, our source for this data, CCH, cites a Kansas law that allows for a "limited tax refund available to disabled, elderly, and low-income households."

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Hillary Clinton unveiled her economic stimulus package today as Congress and the Administration continue to discuss quick fixes for the economy.

The Tax Foundation weighed in on the issue with a proposal to focus on long-term solutions instead, such as lowering the corporate tax rate, currently the second highest in the industrialized world.

"While stimulus packages may be politically popular," said Dr. Robert Carroll, study author and vice president for economic policy, "they are often ill-timed, poorly-crafted, and do little to boost the economy.  Sound monetary policy should be used in the short run to help stabilize the economy."

Click here to read Fiscal Stimulus: Missing the Big Picture?.  Click here for more on corporate taxes.

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Investor's Business Daily cartoonist Michael Ramirez draws a pretty funny picture, contrasting the presidential campaign's "change" rhetoric with the feelings of many U.S. taxpayers. Enjoy!

 

 

credit: IBD/Michael Ramirez 

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Carroll County Circuit Judge Thomas Stansfield yesterday dismissed a lawsuit challenging Maryland's recent tax increases.  The suit alleged that during the special session called to enact the tax increases, the Senate violated a constitutional requirement to obtain consent of the House before adjourning for more than three days.  The case turned on what the state constitution means by "consent."

Submitted into evidence was a letter dated November 9, from the Senate Secretary to the House, requesting permission to adjourn.  However, depositions revealed that the letter had actually been written to memorialize an oral agreement after November 12—already well into the adjournment—and backdated.

This angered the judge, but he ultimately concluded that this constitutional violation does not justify invalidating the legislation:

Although the court is inclined to agree with the plaintiffs regarding the reprehensible nature in which the legislature conducted itself, the remedy they seek in redress is too drastic a notion to accept. The court can simply not agree that when a technicality in procedure is violated, the entire slate of lawfully enacted legislation should be invalidated.

The judge was worried that interpreting the "consent" provision literally would allow "one chamber of the legislature...to defeat the actions of the other by simply refusing to participate in the legislative process."  Of course, that's probably the purpose of the provision, which has now been effectively nullified.

The legislators who backed the tax increases are of course miffed at any challenge to what they wrought:

"This is ... one of the biggest abuses of taxpayer dollars that I have seen here," said House Speaker Michael E. Busch, who estimated the cost of defending the suit was more expensive than holding the three-week special session.

Well considering the legislative session approved nearly $2 billion a year in tax hikes, that's not likely.

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• Which States Tax Groceries? by Gerald Prante.  The Tax Foundation is often asked which states exempt certain items from their general sales taxes, especially as they relate to food. The following is a list of the states that do tax groceries, and if applicable, which ones apply a special rate on grocery items.
• Challenge to Maryland Tax Increases Dismissed by Joseph Henchman.  Carroll County Circuit Judge Thomas Stansfield yesterday dismissed a lawsuit challenging Maryland's recent tax increases.
• Vermont Is Latest State to Consider Lottery Privatization by Alicia Hansen. As we have said before, an outright lottery sale, not a lease, would be good news as it would get the state out of the lottery business entirely. Vermont is the most recent state to catch the lottery "privatization" bug, and is even hoping to beat the other states to the punch.
• Giuliani Tackles Taxes by Nate Bailey. Yesterday, former New York City mayor and GOP presidential candidate Rudy Giuliani unveiled his plan for tax reform and relief.
• Helping Two-Legs Good, Helping Four-Legs Bad by Joseph Henchman. When politicians start exempting certain groups from general taxes, they pick winners that pay no taxes and losers that pay higher taxes. Here, the line was arbitrarily drawn between charities that help needy people (winner) and charities that help needy animals (loser).

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