REUTERS/Cheryl Ravelo

A few extra cents charged for milk and bread can add up to higher rates of hunger, new research suggests.

Grocery taxes, though somewhat prevalent in the U.S., are often considered invisible by policy makers. Because the tax is added on at the time of purchase, it’s not staring customers in the face, says Norbert Wilson, a professor at Auburn University who researches consumer economics. “Unless you know you have just $10, you’re not standing there thinking, ‘oh, it’s actually $10 plus this tax.’ You just go with the price as-is; you kind of ignore it,” Wilson says. “It’s not right in front of us.”

Besides, across the 14 states that have one, the average grocery tax is just over 4 percent, which sounds fairly nominal. But over the course of many shopping trips, those extra dollars can tip the scales in a way that strains the lowest-income families.

Wilson is the lead author of a new paper, to be presented next week at the annual meeting of the Agricultural & Applied Economics Association in Boston, which takes a wide view of how grocery taxes impact the poor. Alongside researchers from Cornell and the University of Kentucky, Wilson examined the 14 American states that impose some tariff on store-bought food to see how these taxes impacted low-income consumers at risk of going hungry on a chronic basis.

Merging tax rate information with data from the Current Population Survey Food Security Supplement—a nationally representative survey about consumer behavior—the researchers were able to run calculations analyzing self-reported food insecurity in the areas that levy taxes on groceries. These taxes can break down in a handful of ways: some states, such as Arkansas, levy a grocery tax that’s lower than the standard sales taxes; in other places, county and state taxes compound and balloon as high as 10 percent. Across the 14 states studied, the average tax rate was 4.3 percent.

But, Wilson found, even a slight bump in tax rate translated to an increased likelihood of food insecurity. Upping grocery taxes by just one percentage point led to a higher risk of hunger.

An uneven burden

How do small taxes wind up having such a big impact? While lower-income families spend less on food than higher-income families, the money that they do spend comprises a larger percent of their overall take-home pay. The lowest-income Americans spend an average of $3,667 on food each year, amounting to 34 percent of their average income, according to the USDA. (In contrast, middle-income families dedicate about 13 percent of their annual incomes to food.) For a family hovering around or below the poverty line—living on $2,000 a month for a family of four—additional expenses add up quickly. If that family spent 34 percent of their income on food, that would amount to $8,160 a year. A tax rate of 4.3 percent would tack on an additional $350.88. That increase may curb food-buying habits. “Grocery taxes may increase food insecurity mainly through a reduction of grocery food purchases,” the authors write.

Exacerbating that problem is the fact that the areas that impose food taxes are also the parts of the country that have the largest populations of food-insecure individuals. As Takepart pointed out, the states with the highest rates of food insecurity in 2014— Mississippi, Arkansas, and Alabama—all impose taxes on groceries.

Grocery taxes by state and country. (Courtesy of Norbert Wilson)

Why do grocery taxes exist at all? Some states, like Philadelphia, which passed a soda tax in June, view them as ways to pad the state’s coffers—but that doesn’t always pan out. In some places, residents go to great lengths to evade the cost hikes. In Kansas, where 1 in 7 people rely on food pantries or meal programs and groceries are taxed at a rate of 6.5 percent, some residents travel to neighboring states to avoid additional taxes, according to a report prepared by the Kansas Public Finance Center at Wichita State University. Many Kansas counties border states that either exempt food from taxes, or tax it at lower rates: Colorado waives taxes, and Missouri imposes at tax of 1.2 percent. “Particularly if you're on a fixed income, it makes a lot of sense to drive across the state and buy food where it's a lot cheaper," Ashley Jones-Wisner, state policy manager for KC Healthy Kids, the nonprofit advocacy group that commissioned the report, told NBC News.

Abolishing grocery taxes might be one solution. But, as Wilson points out, that prospect isn’t necessarily appealing to cities that do reap profits from the taxes. A soda tax in Berkeley, for instance, generated $1.2 million in its first year; in Kansas, shoppers’ habit of buying groceries in tax-free states cost the government $21.2 million in tax revenue in 2013 alone.

Another solution might be an expanded federal food safety net. In Wilson’s study, the relationship between grocery taxes and food insecurity didn’t hold steady for families receiving SNAP benefits. Since SNAP purchases are exempt from taxes, “the SNAP program also indirectly reduces food insecurity by shielding participants from the negative effects of grocery taxes,” the researchers wrote.

But while SNAP benefits may offer a degree of insulation, the number of people protected by them is dwindling. As my colleague Eillie Anzilotti has reported, the share of food-insecure people receiving these benefits has sharply declined since April, when a federal work requirement evaporated SNAP eligibility for hundreds of thousands of Americans. Many people reeled from the loss, turning to food banks or soup kitchens that were already stretched thin and unable to accommodate increased demand.

Clearly, SNAP benefits aren’t necessarily a ticket out of hunger. But, Wilson says, the study suggests that eligible families might reap unexpected gains from enrolling in SNAP. They could feel less of a wallop from grocery taxes and fewer might go hungry.

A handful of other cities, including San Francisco and Boulder, face grocery tax decisions on the ballots this November. Voters asked to reconcile potential revenue streams against the cost of food in residents’ grocery bags and bellies might well bear these findings in mind.

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