As tax filers racing to meet today's deadline know, taxes can get complicated. But as a writer at our sister paper SF Weekly recently reported, the codes governing taxes on food are byzantine even by tax attorneys' standards.
As Joe Eskenazi writes, "California's rules governing food taxation are demonically complicated and cluttered with reams of arcane and arbitrary regulations." In California, there's a tax on to-go hot chocolate, but not on to-go coffee. Meat-filled samosas are taxable, but cream-filled doughnuts can't be taxed. And while California's sales tax rate - the highest in the nation - makes its application especially burdensome, many other states are also struggling to fairly determine which foods qualify for a longstanding "home consumption" exemption that's unpopular with governments trying to fill their coffers.
Washington is one of 24 states that's signed on to the Streamlined Sales and Use Tax Agreement, which proposes to reduce administrative hurdles and simplify tax collection. Yet most sensible tax payers would agree there's nothing streamlined or simple about a five-page definition of candy issued in 2010 by a Streamlined Sales Tax Governing Board sub-committee. The paper was issued after a decision defining candy as "not...containing flour" inadvertently classified Kit Kat and Reese Sticks as cookies, which would be subject to tax.
Candy remains sticky in tax circles. Washington's Department of Revenue website decrees, "For a list of products and whether they meet the definition of candy, refer to the department's internet site. If the product in question is not listed, write the department, including a label or copy of label for the product, for a ruling."
So who cares whether limiting candy's acceptable shapes to "bars, drops and pieces" has any bearing on Cocoa Krispies standing as a breakfast cereal? The many Americans who buy food.
According to Eskenazi's story, tax relief adopted to aid the poor - who spend more of their incomes on food than rich people do - are now mostly benefiting the well-to-do. He quotes an esteemed tax scholar who says 45.5 percent of tax exemptions are enjoyed by households earning more the $70,000.
"In order to provide limited relief to its poorest residents, the state allows every last person to benefit, even the wealthiest of the wealthy, buying caviar-stuffed lobster tails from exclusive upper-class markets that make Andronico's look like Grocery Outlet," he writes. "Breaks aimed at aiding the underprivileged are being snapped up by the well-to-do."
It's a messy topic, but Eskenazi's clear explanation of the issues involved makes for excellent Tax Day reading. The whole story's here.