How taxes on groceries are driving American families to hunger

The views expressed by contributors are their own and not the view of The Hill

Americans like to imagine hunger as a problem that happens elsewhere. We picture failed harvests, refugee camps and fragile states half a world away. Hunger, in this narrative, belongs to poorer nations, not to the wealthiest country on earth.

But the numbers tell a different, less reassuring story. Roughly 14 percent of U.S. households face food insecurity, according to the most recent estimates by the USDA. One in five children live in homes where access to adequate, nutritious food is uncertain. Hunger, in other words, is not just a foreign problem. It is an American reality, unfolding quietly in cities, suburbs and rural communities across the country.

The reasons are easy to identify. Housing costs have soared. Wages for many workers have failed to keep pace with inflation. Gasoline and utilities consume ever larger portions of family budgets. And elevated food prices have forced many households to confront impossible arithmetic each month: rent or groceries, medicine or dinner.

Yet amid all the discussion, one contributor to food insecurity receives remarkably little attention: taxes on groceries.

Most states do not tax groceries, reflecting a longstanding bipartisan understanding that food is a necessity, not a discretionary purchase. Yet nine states still impose some form of tax on groceries today, and in some communities, additional levies push the total tax rate on basic food items to nearly 9 percent. These are often the very states where food insecurity is most severe. For a family already choosing between rent and groceries, even a small increase at the checkout counter can have outsized consequences.

Recent research by a group of university researchers, myself included, found that even a small bump in grocery taxes can have significant impacts: an increase of 1 percentage point in the tax rate is linked to almost a 1 percent rise in the chances that low-income households are food insecure. The conclusion is difficult to escape: taxing groceries appears to push families already living on the edge one step closer to hunger.

This is not just a statistical curiosity; it is a policy design problem. Grocery taxes are inherently regressive, consuming a larger share of income for poorer households than for wealthier ones. In practice, that means the families most at risk of hunger are the ones most burdened by the policy are the ones at most risk of hunger.

And the problem may be even worse than it appears.

In another recent study, my co-authors and I found evidence that retailers frequently “over-shift” grocery taxes onto consumers. In plain English, stores often raise prices by more than the tax itself. On average, every dollar generated in grocery tax revenue translates into a $1.44 increase in the final price shoppers pay at the register.

Retailers, in this case, do not absorb the tax; they benefit from it. The effect is even more pronounced in discount and dollar stores — precisely where lower-income households are more likely to shop.

This is an odd and uncomfortable policy outcome. States impose grocery taxes to raise revenue, not to magnify hunger. Yet that is increasingly what the evidence suggests these taxes may be doing.

None of this is to suggest that grocery taxes are the primary driver of hunger in the United States. They are not. But they are unusually direct — a policy lever that operates not in theory but at the checkout line, where millions of Americans make daily decisions about what they and their families can afford to eat. And unlike broader economic forces, this lever is entirely within the control of state governments.

Eliminating grocery taxes would, of course, require states and local governments to replace the lost revenue. But policymakers have better options. More progressive tax systems, including income taxes that ask more from those most able to pay, would place less strain on struggling families while improving food security. Even property taxes or targeted levies on alcohol, tobacco and heavily processed snack foods would be less punitive than taxing basic groceries. A society concerned about hunger should not finance public services by making dinner more expensive for those least able to afford it.

Public policy is inherently an exercise in trade-offs. But some trade-offs are harder to justify than others. Taxing groceries to raise revenue may be administratively simple. It may even appear politically painless. Yet its effects are neither neutral nor evenly distributed. It shifts the burden onto those least able to bear it and, in doing so, risks deepening a problem the country already struggles to contain.

Hunger in America is not inevitable. It is the sum of choices — including the quiet, routine choice to tax the most basic necessity of all.

Harry M. Kaiser is the Gellert Family Professor of Applied Economics and Management at Cornell University.