Posted by I recently saw a bumper sticker, which simply read, “Thank God for Mississippi.” It wasn’t meant as a complement to the Magnolia State. Only two states in the nation tax the purchase of food – Alabama and Mississippi. What’s wrong with this picture?
Currently, 4 cents of every dollar spent on food is taxed by the state. According to the United States Department of Agriculture in 2007 the average family of four spent $6,525.60 per year on food. That means the state received $261.02 from the average family for the cost of food that year in tax revenue.
The state food tax produces approximately $300 million annually for education. Because all sales tax is earmarked for education and Alabama spends near the least on education of any other state in the country it wouldn’t be prudent to simply cut out this sale tax on the backs of the students of this state.
Representative John Knight has introduced the Tax Fairness Amendment of 2009. This amendment would eliminate the state tax on food and make up the revenue by gradually eliminating the federal income tax deduction for upper level wage earners. For example, this deduction would begin to be reduced for joint fillers earnings in excess of $125,000 in adjusted gross income and the would be completely phased out for those earning over $400,000.
The net effect of the legislation on the average family of four is a reduction in taxes for all families earning under $200,000. The Alabama Legislative Fiscal Office estimates the average family of four would save $468 per year as a result of the reduction of the sales tax on food.
This will be the first bill voted upon when the legislature returns into session on Tuesday. It is an important bill. It is the only bill before the Alabama House of Representatives, which provides a middle class tax cut.
The opponents of this measure have reached into a sorted bag of tricks in an attempt to make this some type of economic class war. Many have said this just helps the poor – that’s just not true. By example, those purchasing food with Food Stamps don’t pay sales tax. This is a tax cut for the middle class. To parse the argument of the opponents one step further, what would be the problem with helping the poor? This bill doesn’t but those opposed to the bill seem to suggest there would be something wrong in reaching out to the least financially equipped among us.
There is nothing fair about the tax structure in Alabama. This is one chip from the large mountain of tax unfairness that we have as a result of living under one of the most antiquated state constitutions in the nation. The time has come for tax fairness.
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While your argument may be sound Rep. Guin your facts are not completely correct. Please see this copied from the Tax Foundation of American regarding which states 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.”
If a family of 4 pays $261 state sales tax per year on food, how can this bill save them $468 per year?
Can’t believe Doc’s Political Parlor allows a guest blogger to state absolute falsehoods in his posts.
Alabama is like Mississippi and no other state, in this regard: “Two states—Alabama and Mississippi— fully tax food and offer no credit. All other states exempt food partially or fully from sales tax.” See end note #2 here.
There is more reading on the matter in this .pdf file. Both links are from the Center on Budget and Policy Priorities.
Is it a good thing to be one of two states in the nation that fully tax groceries?
Danny, Representative Guin wrote, “Only two states in the nation tax the purchase of food – Alabama and Mississippi.” So based on the links you provided in your comment #4 it appears to me that Guin was wrong because he made no distinction between “tax” and “fully tax”. Whether that was accidental or intentional only he can answer, I suppose.
I still wonder how and if he will respond to my question in comment #2.
Well said, Rep. Guinn.
It’s a reasonable question, Don, and I can’t help but wonder if the differing #’s came from information related to different versions of the bills.
I still wonder how and if anyone will respond to my question in comment #4.
Last year, the argument was poor must pay their mite in order to feel they had a stake in government.
Unsaid ss far, is that will impact mainly the donor class but imagine at the higher levels
For grins this year, since there wage income of about $25k to declare, I didn’t take the federal deduction. I now owe the state of Alabama $9, wow.
In response to #4 – No it is not a good thing to be one of any number (no matter what that number is) to levy sales taxes on food. But will this bill also revoke county and municipal sales taxes on food?
Does not look like it. The local government associations are on record as opposing any repeal of their sales tax on food without an alternative tax source.
I’ll hazard a guess on #2. The Dept. of Ag. in 2007 gave the cost of the Thrifty Food Plan as about $125 a week for a family of four, and that multiplies out to more than $6,000 a year for food, with a 4% grocery tax over $240. Guin’s first number seems to be based on the Thrifty Food Plan, which is controversial because almost no one can eat that cheaply.
The Legislative Fiscal Office used the Moderate Food Plan from November 2008, which puts the cost of food at $225 a week for a family of 4. That’s what multiplies by 4% to give $468 a year.
Incidentally, the third USDA column illustrates what higher-spending families pay. Their grocery taxes would drop by $569 a year.
The issue is not the tax as much as it’s use.
He states the tax is used for education. Government run schools spend somewhere between $10,000 – $12,000/ year per student with embarrassing results. It’s a model for inefficiency and they want to fix it with more money and more money and more money.
My daughter attends a private christian school at $3,500 / year with no police officers in the hallways and they recite the Pledge of Allegiance and pray daily.
Good to know that Guin is against gambling since he doesn’t want to be like Mississippi.