The Most Unkindest Tax of All

We’ve written a great deal about the various forms of taxation in Missouri. Some taxes are too high, some may be too low, and some shouldn’t exist at all. But the most dastardly tax out there, unfair and regressive, is alive and well in Missouri’s cities: the tax on groceries.

The Tax Foundation reported last year that 32 states exempt food purchased for consumption at home from tax. It reports that six other states tax food at a lower rate,

Food sales tax rates in these states are as follows: Arkansas: 1.5 percent, Illinois: 1 percent, Missouri: 1.225 percent, Tennessee: 5 percent, Utah: 3 percent, and Virginia: 2.5 percent.

This is true but incomplete. The Missouri General Assembly did in fact reduce its sales tax on food, but local sales taxes are still collected on food and beverage purchases. In St. Louis’s Central West End, the tax rate on groceries adds up to 7.4 percent; in Kansas City’s Power & Light District it is 7.6 percent.

What makes this the most unkindest tax of all, as Shakespeare might say, is that it is regressive, meaning it weighs disproportionately on the poor as everyone must buy food. Because Kansas City and St. Louis charge additional sales taxes on top of the state rate, any intention by the General Assembly to spare low-income consumers this tax is undermined.

To make matters worse, both Kansas City and St. Louis charge a flat and regressive 1 percent earnings tax on every dollar earned. The earnings tax is levied on the first dollar earned, and there is no exemption for lower-income workers. Adding insult to injury, the earnings tax is not levied on types of income enjoyed by wealthier citizens such as investment income or retirement.

Kansas City and St. Louis have a large number of low-income residents. Unfortunately, the cities’ taxes only add to the problem. The first order of business for any city leader who wants to help low-income workers should be to take less of their money away from them.