Ending the Tax is Better than a Rebate System
The food tax refund program misses most low-income families.
It returns less than 1/10 of 1% of the total food tax to South Dakota homes, despite much more need. (8/11)
These types of programs are inherently ineffective.
Would ending the food tax be better? You bet!
Good intentions are not enough. Tens of thousands of households who need their tax money for necessities are paying tax on their food but receive no rebate.
The only way to get the help to everyone who needs it is to stop taxing food for everyone. Relief by ending the food tax would not miss anyone. This is the most efficient, effective approach.
Illustrated by the numbers
The experience of the refund program in South Dakota compared to other states dramatically illustrates the inherent problem with a program that is not automatically applied to people in need. Among the 7 states that tax food at their full sales tax rate are 5 that attempt to offer some sort of offset. In South Dakota people must find out about the refunds and apply. In the others, the refunds are automatically calculated for people from their income tax information, if they did not think to apply. In those states, such as Kansas, a very high percent (over 85% last we heard) of low-income households receive a refund, while in South Dakota, less than 1% receive refunds.
Getting this help to people must be automatic. The way to reach everyone who is negatively impacted is to take the tax off for everyone.
Why are eligible families missed?
> Not knowing about the program
> Not wanting to use a government program
>
Avoiding stigma
> Not doing the paperwork. Some simply do not do well at paperwork, no matter how simple the state tries to make it. For example, one former recipient is a 91-year-old who understood nothing about the program. But his daughter-in-law social worker helped him sign up. With the rebate for the tax he had paid, he was able to buy almost a week's groceries. But twice he threw away the paperwork from the state for his renewal, thinking it was junk mail, and the daughter-in-law had to make phone calls to Pierre to have him re-instated. She says "Not everyone has someone looking out for them."
Thousands more are ineligible due to the tight income limit but are economically struggling.
Advantages of Ending or Reducing the Food Tax
• No one missed by the income limit.
• No one missed because they don’t know about it
• No one missed because they don’t understand
• Nursing homes and child cares would benefit.
• No one missed for any reason.
• No need for a government program
• The benefit comes at every grocery purchase. No waiting for refunds. No paperwork.
• No refund check to get stolen.
• No refund check lost due to the family's changing address.
• No one missed because they want to save their dignity
• No fraud, investigations, or prosecutions
• More grocery money available where children’s health and education are negatively impacted by food tax
• More and better food accessible by people with diabetes, heart disease, or other conditions where lack of optimum nutrition puts them at great risk.
End the Food Tax
Dignity, not Charity
8/21/11, Computations based on US Census data and info from SD Legislative Research Council.