Chapter 1:  – The impact of grocery taxes on household food insecurity (job market paper)

Abstract: Prior research has documented the impacts of targeted taxes on sugar-sweetened and fatty foods, but the evidence on the effects of grocery taxes generally is less complete. The case for a tax on food relies on the theoretical inelastic nature of staple foods—if the price increases, most households will not purchase significantly less food, so the tax will raise more revenue than a similar tax on a price-elastic good. A tax on grocery foods is therefore attractive for states as a revenue source. This paper uses data from the U.S. Census Bureau Current Population Survey Food Security Supplement to examine the relationship between grocery taxes and food insecurity. Exploiting the variation in state-level food taxes for 46 states over a 17-year period suggests that grocery taxes are a burden on the food security status of low-income families. Taxes on grocery foods are regressive because of the disproportionate impact they have on low-income households and their ability to purchase food, potentially forcing households to buy fewer or lower-quality groceries. This has far-reaching implications for population health and pre-existing racial, ethnic, and income-based health disparities.