Does your state charge sales tax on diapers?

We think about basic needs and their availability to people struggling to make ends meet.  But there is not a universal definition of what constitutes a basic need, or agreement on whether such needs should be taxed.  That is apparent when considering the sales tax policies of each state.  For the most part, each state has its own approach to sales tax–whether there is one, what rate it will be, and what it applies to.  Some states, like Alaska, Delaware, New Hampshire, Montana, and Oregon, opt not to have a sales tax at all.  (Hawaii does not officially have a sales tax, but it has an excise tax which business can pass on to the consumer, so it is essentially a sales tax.)  Many states exempt certain basic necessities from tax, but each state has its own approach to what is considered a basic necessity.  For example, several states exempt food, but they often have individual definitions of what counts as food.  Likewise, some state exempt medical supplies, which for some states include all diapers (as in Massachusetts), adult diapers and incontinence supplies only (as in Connecticut, Maryland, and Nebraska), and in other states explicitly do not include diapers.  In other states, diapers are not taxed because they fall under a general exemption for clothing (as in Minnesota, New Jersey, New York, Pennsylvania, and Vermont).  Still other states have annual sales tax holidays on certain items (generally during the first week of August or so as families are doing “back to school” shopping), often including diapers.

We have a Sales Tax Survey identifying the specific sales tax policies as they relate to diapers for each state .  Thanks to the Yale Law School Arthur Liman Research Project Students, Matthew Smith, Irina Vaynerman, and Tara Rice for their legal research assistance.

You can find more interesting research related to diaper need on our website here.

Food for Thought on Tax Day

As you scurry to finish your taxes in advance of today’s deadline (or gloat that you have already spent your refund), consider for a moment that there will be many people who receive a tax credit because, even though they are working, that job does not pay enough to raise them over the poverty line.  As noted in this blog post from Bread for the World, “In 2010, 10.7 million people with jobs lived below the poverty line. A full-time minimum-wage earner makes only about $14,500 a year.”  The Earned Income Tax Credit helped lift 5.4 million of these people above the poverty level, but often, depending on where they live, this is not enough to allow them to meet the Self-sufficiency Standard, which defines the amount of income necessary  to meet basic needs (including taxes) without public subsidies (e.g., public housing, food stamps, Medicaid or child care) and without private/informal assistance (e.g., free babysitting by a relative or friend, food provided by churches or local food banks, diapers from a diaper bank, or shared housing).

The family types for which a Standard is calculated range from one adult with no children, to one adult with one infant, one adult with one preschooler, and so forth, up to two-adult families with three teenagers. The Self-Sufficiency Calculator for various states are available on the internet–for example, you can find the calculator for Washington State here, for Colorado here, and for DC here.  You can also look up the most recent tables for your state here.  In each case, the Self-sufficiency Standard is much higher than the poverty level, and demonstrates how much many people with paying jobs must rely on “safety net” programs such as food stamps, housing assistance, and various other forms of assistance to make ends meet.

In the call for lower taxes, many of these same government programs that millions of people rely on are the first programs to be cut.  If your only concern is the bottom-line tax number, one way to lower your taxes yourself is to donate to private charities, which can be deducted from your taxes.  As public services are cut, the need is for private assistance increases dramatically.  Consider lowering your taxes for next year by donating to a charity today.  Some things to think about as you file your taxes.

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