PUTTING GROCERY FOOD TAXES ON THE TABLE: EVIDENCE FOR FOOD SECURITY POLICY- MAKERS
In the United States, grocery food tax policy varies at both state and county levels with 17 states having grocery taxes in the year 2020 and several states are engaged in active debates about whether to remove or impose such taxes. Although there is extensive economic literature evaluating multiple factors that may contribute to food insecurity, an examination of the linkage between grocery food sales taxes and food insecurity is lacking. In this thesis, county-level panel data on grocery taxes from 2006 through 2017 are developed and are merged with household-level data on food insecurity to examine whether grocery taxes are associated with food insecurity. The regressive nature of grocery taxes makes it plausible that taxing groceries could theoretically exacerbate food insecurity. Combining our county-level tax data with food insecurity measures and other data from the Current Population Survey, we estimate that a one-percentage-point increase in grocery tax rates is associated with a 0.84% increase in the probability of a household being food insecure. Using these estimates, we conduct policy simulations of grocery taxes that have been recently considered in six states and assess the potential impacts on food insecurity. Results show that these proposed grocery taxes may exacerbate food insecurity by 1 to 5 percentage points.