Utah legislators are once again debating whether to eliminate the sales tax on food, in hopes of giving a break to lower-income households. But Eccles School professor Adam Looney argues in a new op-ed that while the proposal is laudable in its aims, it is based on a misinterpretation of economic data. Most of the benefit from eliminating the 1.75% state sales tax would go to higher-income households.
“A better approach is to provide low-income families an income tax credit proportionate to what they pay in sales taxes,” Looney argues. “A credit targets relief directly to low-income families, allows families to decide which necessities to spend the savings on, and more directly addresses a broader budget problem of having “too much” income tax revenue and “too little” sales tax revenue.”
Read Looney’s full case for the income tax credit in The Salt Lake Tribune.