As prices rise, push to end diaper taxes grows | National | kearneyhub.com

2022-07-30 18:25:23 By : Ms. Millissa Du

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To help inflation-plagued and struggling families ease the burden of buying necessities, several states are scrapping the sales tax on infant and adult diapers.

Colorado and Iowa have both agreed since May to get rid of the state tax on all diapers, beginning in 2023. Florida and Maryland’s laws took effect in July.

A bill in New York to do away with all local diaper sales taxes — there’s already no state diaper sales tax — was recently signed by Democratic Gov. Kathy Hochul. And Michigan and Ohio still have active bills, out of the dozens that were considered by legislatures this session.

Thirty-one states charge sales tax on diapers, according to the National Diaper Network, a nonprofit organization that coordinates charitable donations and distributions of children’s diapers. Only North Dakota taxes children’s but not adult diapers.

The movement to eliminate those taxes is gaining momentum now because of record-high inflation, booming state budgets and, in some states, abortion bans that advocates say may lead to more children in need. But not everyone agrees that such a specific tax cut would have the desired effect.

Supporters argue that scrapping the diaper tax is vital, especially for people with low incomes, because children’s diapers are not covered under state and federal poverty assistance programs. Adult diapers are covered under Medicaid in many states if they are deemed a medical need.

“Diapers are a basic necessity we don’t think should be taxed,” said Phillip Vander Klay, director of policy and government affairs at the National Diaper Bank. “Those few extra bucks a month can mean (families) can get a bigger box of diapers, so they can drop off their kid at child care and not have to miss work. We see a big impact on families that are trying to stretch every dollar to make ends meet for the month.”

But opponents contend that states can’t afford to lose the revenue from the sales taxes, despite record surpluses in many states this past year. Other critics argue that cutting sales taxes on just diapers is unfair to families that don’t need them but could use a tax break too.

Janelle Fritts, a policy analyst at the Tax Foundation, a conservative-leaning think tank, said states are eliminating diaper taxes “because they have money, and inflation is so high they are looking at ways of giving some relief to taxpayers. It’s not the way we would prefer for tax relief, but they are politically popular right now.”

Her organization favors more broadly based tax cuts, such as reducing the sales tax overall, rather than piecemeal reductions.

“It’s actually more beneficial for lower-income people if taxes across their board are lower,” she added.

Michigan state Rep. Julie Alexander, a Republican and sponsor of a bill that would eliminate sales tax on infant and adult diapers, said she took on the issue to help families.

“During these struggling times, it was important to me to find something that would really impact the family’s pocketbook,” she said. “Families are struggling right now, with everyday expenses, increased cost in grocery stores, gas prices. Families on a budget are the ones who would benefit the most.”

The U.S. Labor Department reported the inflation rate at 9.1% in June, the largest annual increase since 1981.

Alexander said the conversation on diaper taxes started because Michigan exempted feminine hygiene products last February, costing the state’s treasury $6.5 million, and this seemed like a logical continuation of that trend.

But the loss in revenue hurt the diaper tax cut cause, according to Michigan state Rep. Laurie Pohutsky, a Democrat who voted for the diaper bill in committee but not on the floor. A companion bill is still alive in the state Senate, and House supporters are looking to bring it back in that chamber, as well.

Pohutsky said she thought eliminating the diaper tax would “help families a little bit,” but by the time the bill got to the floor, she became concerned that numerous proposed bills would cut sales tax on various items, and that passing too many of them would lower overall revenue too much. A Michigan legislative analysis estimated the lost diaper tax revenue at between $18 million and $20 million annually.

It would be better to “invest in programs that are going to make most people’s lives better,” Pohutsky said, such as broadly based tax cuts. “Different people need to spend different percentages of their income on different things.”

In Ohio, Democratic state Rep. Monique Smith is the author of a bipartisan bill that would exempt both baby and adult diapers from sales tax. In addition to providing a financial boost to families, Smith tied the issue to the end of nationwide abortion rights by the U.S. Supreme Court in June.

She called her bill “just one example of a package of legislation the Democrats put together to offset some of the financial burden when you are forced to expand your family.”

Other items in the Democratic package included bills that would create an infant formula tax credit, require insurance coverage of medically necessary donor human milk, and provide free “baby boxes” to new parents who complete a course on baby care. A baby box is a small, bassinet-like sleeping space for a newborn. It would come with instructions on safe sleeping for infants.

Smith pointed to Ohio’s $2.7 billion surplus in its rainy day fund as another reason to give parent taxpayers a break on items “that never should have been taxed in the first place.” Most states, including Ohio, don’t impose a sales tax on groceries.

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