Gov. Spencer Cox hit a political home run with his approach to the sales tax on food in his budget proposal. It makes a lot of sense.
It will help low-income families and individuals a lot more than simply eliminating the sales tax on food for everyone. Wealthy people – who can afford it — will continue to pay the tax.
The best tax system is broad-based with low rates. Utah already has too many tax exemptions and other tax breaks. That’s why it would be a big mistake to further narrow the sales tax base by taking the tax off food.
There’s also a lot of concern in this country about wealthy people not paying their fair share of taxes. So why eliminate a tax when the biggest beneficiaries of the tax cut would be wealthy people?
I remember a few years ago when a smart and rather wealthy state legislator questioned the wisdom of taking the sales tax off food in a discussion on tax reform. “I sometimes spend $120 to buy a big chunk of prime rib for a Sunday dinner with my expended family,” he said. “I can afford to pay the sales tax on that delicious beef. Why do progressives want to give me that tax break? Let’s find a better way to help low-income people.”
That’s exactly what the governor is trying to do. His plan is to provide $160 million in tax relief to low-income Utahns through a grocery tax credit. That’s a much smarter approach than eliminating the sales tax on food for wealthy people.
The Cox grocery tax credit plan “would give more money back to lower- and middle-income households than cutting the food tax would,” the governor’s press release said. “For example, cutting the food tax would result in a $185 benefit for a two-parent household with six kids, while our proposed grocery tax credit would provide a $400 benefit. For a single parent with two children making $20,000 a year, cutting the food tax rate would give that family an extra $85 while our grocery tax credit would provide a $240 benefit.”
The details, such as when the benefits would be paid, have yet to be worked out. But I think most low-income families would prefer to get a $400 benefit, perhaps paid at $100 each quarter, than have grocery bills reduced by small change at each purchase, totaling only $185 over a year.
I have a hard time understanding why low-income advocates want to eliminate the sales tax on food for everyone when upper-income and wealthy people would get most of the tax break.
Perhaps the Legislature can do some fine-tuning on the governor’s proposal, but it’s clearly the best way to handle the years-long debate over the sales tax on food.