You’ve probably heard it said before – taxes on foods and beverages are regressive. But what does that really mean? Let’s break it down.
The Oxford Dictionary defines regressive as “taking a proportionally greater amount from those on lower incomes.”
Because lower-income families have tight budgets, price increases always hit them the hardest. When a tax is imposed on foods and beverages the added cost takes a larger chunk out of their incomes compared to wealthier people.
Research backs this up. A 2015 study by the Mercatus Center at George Mason University found that “selective consumption taxes may do little to change behavior and that the poor spend a far greater percentage of their disposable budgets on these selective consumption taxes.”
Presidential candidate Bernie Sanders also denounced these consumption taxes because they harm the poor the most, saying a beverage tax is a “regressive way to raise funds.”
Taxes on foods and beverages are bad policy for many reasons, but one of the worst is the disproportionate impact they have on families struggling the most. Politicians should look for ways to generate revenue without burdening low-income families.