Jophiel wrote:
Charging tax on food stamp items is just taking money out of the food stamp program and moving it into other programs while losing a percentage of it due to overhead in tax collection.
Not charging tax (assuming taxes would normally be charged for the purchase) is just taking money out of the other programs and using it to offset the cost of the food stamp program. Tomayto, Tomahto.
Oh. I'd also argue that there's more tax overhead doing it this way, since now every business that accepts EBT will have to handle the exception for charging tax on those purchases. There's no change to the existing management of sales tax if you just charge purchases with the cards the same as cash from any other customer. So, not seeing the benefit here.
Quote:
Most government purchases are tax exempt (I'd say all but maybe there's some outlier) because it'd make no sense to spend an extra 7% out of the school desk budget on sales tax just to have 0.03% of that come back around into the school desk budget.
If it's the government actually buying it for government use, that makes sense. But in this case, the government is handing money to consumers and having them buy products with it in the market. That's not remotely the same thing. When the government hands out a $5000 tax credit to someone who buys an electric car, that's the full amount you get back after you pay the full price for the car. You pay taxes on the full price of the car, not the cost minus $5000. Now, the government can also provide a deduction for the sales tax (and did in the recovery act), but that's a separate part of the deduction and it still comes out of the budget for the program. They don't just declare that part of the cost tax free and make the state take a hit on the tax on the sale. You pay the sales tax, that money goes into whatever taxes on cars goes to. Done. Then the government hands you money back, allocated and authorized for that particular purpose.
By doing this differently with a food stamp program, they are basically taking money from those other programs and shifting it into the food stamp program, just as I said. It's deceptive at the very least. Obviously, the state is free to shuffle funds around as they wish, but it does seem like an odd way to go about it. Also, I think it creates a problem in terms of relative perceived cost to those on the program versus those not. It just seems like they went out of their way to do this in a way that creates more problems and doesn't seem to have any redeeming feature other than being able to respond to critics of the program by showing how little it costs, or how efficient it is, or whatever. So... intent to deceive seems to be the motivation.
I could certainly be missing something, so feel free to educate me if I am.