Tuesday, May 27, 2014

Food taxes? Huh?

One thing I loved about China was the lack of sales tax. Let me be more specific. Although there are taxes on consumer products, these are added into the overall price set by the supermarket or shop. Thus, when you want to buy, say, a notebook for ¥2.5, shampoo for ¥15, cooking oil for ¥27.3, and bread ¥7.2, you will pay exactly ¥52 at the register. It was a great system.

That's one of the reasons I love shopping for food. Ohio, Nebraska, Iowa, Texas: I've lived in all of these places at one time or another. Food = no sales tax. I assumed that's how the US system worked. Articles like this from NPR also seem to take it for granted that food, in general, is a non-taxed item. It makes sense. The most vital resource needed by anyone, rich or poor, is food. There's no reason to stick  it to those in poverty by adding a tax onto the only thing they really need.

Then I moved to Arkansas.

I went about life as usual, assumptions and all. It was near the end of our first week that I noticed an interesting tax record on a receipt:
A recent receipt containing both food and non-food items.
Tax 1 and tax 2? What is that?

After crunching the numbers, it became clear that the 9.750% was the regular state and local sales tax and the 4.750% was the state and local sales tax for food. The state calls this a "reduced state food tax". Meanwhile, Washington county and Fayetteville, just tack on their local sales taxes with no reduction whatsoever. This seems somewhat reprehensible for a state that ranked 45th in per capita income in 2012 and had the 4th highest poverty rate in the US in 2012.

It makes me miss China. I'm sure there were taxes involved in the pricing, but at least we didn't have to think about them. At least we could live life as if those taxes didn't exist.

Do you pay sales tax on food? Do you think states or local governments should charge food taxes?

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