From the Decatur Daily:

This summer, Alabama and Mississippi are set to become the only states that apply their full state sales tax to groceries without any relief for low-income families, a distinction critics see as a holdover from their Deep South political past.

Arkansas had been in that category, but its Legislature recently voted to cut the state’s 6 percent sales tax in half for groceries. The tax break starts July 1.

All other states either exempt groceries from the sales tax, have a reduced tax on food, or provide a tax credit or rebate to low-income citizens.

…

In Alabama, where the Legislature will be in session until June, House budget committee Chairman John Knight, D-Montgomery, has proposed legislation that would let people vote on whether to erase the state’s 4 percent sales tax on groceries. So far, it’s gone nowhere.

Knight wants to pay for his plan by eliminating the state’s income tax deduction for federal taxes paid.

His plan is a rather cumbersome way of solving a simple problem.  The root issue is the elimination of sales taxes on necessities, a virtuous goal.  The problem with the way his plan addresses the problem is that it allows people to purchase groceries in quantities or qualities far exceeding what could reasonably be considered necessary.  Wealthy individuals throwing a lavish catered event would be able to get their groceries tax free as well.  A more accurate way of addressing the core issue would be to implement a FairTax like system.

The FairTax eliminates taxation on just the necessities of life by giving every household a rebate on the amount of taxes that a poverty level family would pay if they spend all of their earnings on taxable items.  That way you effectively get the essentials like milk, bread, and baby food tax free, but you end up paying taxes on what most would consider excessive purchases.

Related content:

This entry was posted by Brian on Sunday, April 29th, 2007 at 7:11 pm and is filed under Alabama, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.