Taxing Food for Home Consumption

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3 Taxing Food for Home Consumption

4 Taxing the Poor: Road Map Regional differences in income poverty & poverty related outcomes Historical patterns of property tax Emergence of supermajority rules Growth of sales tax in the south Patterns of revenue and spending Total tax liabilities for the poor over last 25+ years Federal government: progressive change State policies: non-southern states follow federal lead Southern states do not Relationship between state/local tax and poverty outcomes Change over time Fixed effects models Taxing the Poor: Public Policy and Public Health

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15 Tax Revenue on the Eve of the Civil War 20 State and Local Property Tax Revenue Per Capita, TN NM GA AL TX UT NC FL MS AR KY SC DE KS NJ CT VA MI IN VT US PA WI NE MD DC MO IA IL ME OR NH MN RI NY OH WA MA LA CA

16 First Black Congressmen of the Reconstruction Era

17 Property Tax Revenue in Radical Reconstruction 20 State and Local Property Tax Revenue Per Capita, TX NC GA FL TN AL DE SC VA WV KY MS MI VT WI AR MN OR IN PA KS IA MO NJ NE MD ME IL OH LA RI NH NY CT CA MA

18 State Land Tax on a Farm of 160 Acres Valued at the Average per Acre, Mississippi Year Average Value per Acre (dollars) Tax Rate (mills) Value (dollars) Tax (dollars)

19 Supermajorities and Constitutional Limits on Taxing and Spending Redemption/Jim Crow Era Alabama: Constitutional Limit on Property Tax and Education Spending (1875; 1901). Statewide Referendum required to approve any state/local tax increase (1901). Louisiana: Constitutional Limit on Property Tax and Spending (1870s); Change in land assessments to devalue property (1870s) Great Depression Era Arkansas (1934): Supermajority required to raise any tax, except alcohol and sales tax. Civil Rights Era Supermajorities Louisiana (1966), Mississippi (1970), Florida (1971) Spread throughout South and beyond South Dakota (1978), California (1979), Oklahoma (1992), Kentucky (2000), and others.

20 2500 Total State and Local Property Tax Revenue Per Capita, AL AR OK KY LA WV TN MS NC MO SC GA MD OH PA VA FL IN MI TX WI IL MA ME RI VT NY NH CT NJ

21 Constant Dollars State & Local Social Expenditure Per Capita By Region Year Northeast Midwest South West

22 Constant Dollars Individual Income Tax Revenue Per Capita By Region Year Northeast Midwest South West

23 Constant Dollars Corporate Income Tax Revenue Per Capita By Region Year Northeast Midwest South West

24 Constant Dollars State/Local Property Tax Revenue Per Capita By Region Year Northeast Midwest South West

25 State/Local General Sales Tax Revenue Per Capita By Region Constant Dollars Year Northeast Midwest South West

26 Total State/Local Tax Revenue by Source, 2006 Proportion of Total Tax Revenue Northeast South Midwest West Property Tax Income Tax Sales Tax Corporate Income Tax

27 Modeling Tax Liability of the Poor Uniform Assumptions of Hypothetical Family Family of 3 at the federal poverty line One working adult, two dependant children under 18 Renters (not homeowners). State Income Tax Liability-NBER s Taxsim Data Includes state/local income tax liability and all offsetting credits (refundable and nonrefundable) delivered through the tax filing process. Double checked using turbo tax State/Local Sales Tax Liability Survey of Consumer Expenditure: Spending on tangible goods, clothing, food, etc. for each year from State Tax Handbooks ( ): State and Local tax rates on each category of goods (clothes, food, etc.) Total tax liability is income tax plus sales tax. All numbers are adjusted for inflation. Alaska is excluded from analysis.

28 The Federal Story Constant Dollars Federal Tax Liability (FICA + Income) for Family of 3 at Poverty Line Year

29 Constant Dollars State/Local Sales Tax Liability for Family of 3 at Poverty Line Northeast Year ME VT MD MA RI CT NY NJ PA DE NH

30 Constant Dollars State/Local Sales Tax Liability for Family of 3 at Poverty Line South Year AL AR VA SC WV GA TN MS NC LA FL OK KY TX

31 Constant Dollars State Income Tax Liability for Family of 3 at Poverty Line Northeast Year ME VT MD MA RI CT NY NJ PA DE NH

32 State Income Tax Liability for Family of 3 at Poverty Line South Constant Dollars Year AL AR VA SC WV GA TN MS NC LA FL OK KY TX

33 Constant Dollars Total State/Local Tax Liability for Family of 3 at Poverty Line By Region Year Northeast Midwest South West

34 Taxes and Poverty Related Outcomes Primary Question: Is there a relationship between taxing the poor and poverty related outcomes? Analytic Strategy State and Year Fixed Effects Regressions Mechanisms

35 Change in Mortality and Change in Tax on Poor Change in Tax on Poor (Slope) NY NJ IL VA PA MI CA CT DEMA RI MD NH VT HI INOR SC CO SD AZ IA ID OH WY NM MT WA NDME NV TX NE FL WI MN UT GA NC LA MO KY WV KS AL AR MS TN OK Change in Age-Adjusted Mortality (Slope)

36 Change in Property Crime and Change in Tax on Poor Change in Tax (Slope) NY CA CO MI FL NJ TX CT NV MA RI OK HI IL UT MO VA OR GA IN AZ ID IA SD NM WY MT ME ND KS OH PA WA NE DE NH WI MD MN VT LA KY SC AL AR TN MS NC WV Change in Property Crime (Slope)

37 Change in Violent Crime and Change in Tax on Poor Change in Tax (Slope) NY CA FL IL OR MI NJ AL HI AR MOUT GA KY LA OK VA MS NC WV SC IN CO AZ ID SD IA OH WYNM PA WA KS CT TXNV ME NDNE MA RI MD NHWI MN VT MT DE TN Change in Violent Crime (Slope)

38 State and Year Fixed Effects Regressions State Fixed Effects: Control for the unique (time invariant) characteristics of each state Year Fixed Effects: Control for factors that change over time and equally impact all states (e.g. federal policy shift such as the EITC) Additional Controls for Fixed Effects Regressions: Racial Composition of each state: percent Black, percent Hispanic State Poverty Rate State Direct Expenditure State GDP Per Capita State Unemployment Rate State Gini Coefficient (Inequality) Federal Intergovernmental Revenue

39 State/Local Taxes on Poor on Poverty Related Outcomes State and Year Fixed Effects Regression with Controls Outcome Years Taxes on the Poor (β) Standard Error State Age-Adjusted Mortality Rate (N=147) 1982; 1990; *** State Property Crime Rate Per 100,000 (N=1127) State Violent Crime Rate per 100,000 (N=1127) State High School Completion Rate (N=980) *** *** *** Births to Unmarried Mothers as Percent of All Births (N=735) * Controls: % Black, % Hispanic, Poverty Rate, State GDP per Capita, State Direct Expenditure, Unemployment, Federal Intergovernmental Revenue, State Gini Coefficient Notes:***p<.01; **p<.05; *p<.1; Alaska excluded from analysis.

40 State/Local Sales Taxes on Poor on Percentage of Obese Adults (1990 & ) State and Year Fixed Effects Regression Outcome State/Local Sales Tax Coefficient Standard Error Percent of Obese Adults *** ***p<.01; **p<.05; *p<.1 Controls: % Black, % Hispanic, Poverty Rate, State GDP per Capita, State Direct Expenditure, Unemployment, Federal Intergovernmental Revenue, State Gini Coefficient Note: Alaska excluded from analysis. Source: CDC, National Center for Health Statistics

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