To help inflation-ridden and struggling families ease the burden of shopping for basic necessities, several states are waiving the sales tax on baby and adult diapers.
Both Colorado and Iowa have agreed since May to remove the state tax on all diapers, starting in 2023. Florida and Maryland’s laws went into effect in July.
A bill in New York to remove all local diaper sales taxes — there is already no state diaper sales tax — was recently signed into law by Democratic Governor Kathy Hochul. And Michigan and Ohio still have active bills, of the dozens that have been considered by legislatures this session.
Thirty-one states impose a sales tax on diapers, according to the National Diaper Network, a nonprofit that coordinates charitable donations and distributions of children’s diapers. Only North Dakota taxes diapers for children but not for adults.
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The movement to eliminate these taxes is gaining momentum due to record inflation, booming state budgets and, in some states, abortion bans that supporters say could lead to more children in need. But not everyone agrees that such a specific tax cut would have the intended effect.
Proponents argue that removing the diaper tax is vital, especially for low-income people, because children’s diapers are not covered by state and federal poverty relief programs. Adult diapers are covered by Medicaid in many states if deemed a medical need.
“Diapers are a basic necessity that we believe should not be taxed,” said Phillip Vander Klay, director of policy and government affairs at National Diaper Bank. “Those extra few dollars a month can mean (families) can get a bigger box of diapers, so they can drop their child off at daycare and not have to miss work. We’re seeing a big impact about families trying to stretch every dollar to make ends meet.”
But opponents argue that states cannot afford to lose sales tax revenue, despite record surpluses in many states last year. Other critics argue that cutting sales taxes on diapers only is unfair to families who don’t need them but could also benefit from the tax break.
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 for ways to relieve taxpayers. It’s not the way we’d prefer for tax relief, but they’re politically popular right now.”
His organization favors broader tax cuts, such as the overall sales tax cut, rather than piecemeal cuts.
“It’s actually better for low-income people if taxes at all levels are lower,” she added.
Michigan State Rep. Julie Alexander, a Republican and sponsor of a bill that would eliminate the sales tax on baby and adult diapers, said she tackled the issue to help families.
“During these difficult times, it was important for me to find something that would really impact the family’s wallet,” she said. “Families are struggling right now, with day-to-day expenses, rising costs at grocery stores, gas prices. Families on a budget are the ones who would benefit the most.”
The US Department of Labor reported an inflation rate of 9.1% in June, the highest annual increase since 1981.
Alexander said the conversation about diaper taxes started because Michigan exempted feminine hygiene products last February, costing the state treasury $6.5 million, and that seemed to be next. logic of this trend.
But the loss of revenue has hurt the cause of the diaper tax cut, 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 in effect in the state Senate, and House supporters are seeking to bring it back to that chamber as well.
Pohutsky said she thought eliminating the diaper tax would “help families a little bit,” but at the time the bill was introduced, she was concerned that many bills would reduce sales tax on various items and that too many of them would pass. would reduce overall revenue too much. A Michigan legislative analysis estimated lost tax revenue for diapers at $18 million to $20 million per year.
It would be better “to invest in programs that will improve the lives of most people,” Pohutsky said, such as large-scale tax cuts. “Different people have 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 baby and adult diapers from sales tax. In addition to giving families a financial boost, Smith linked 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 set of laws Democrats have put in place to offset some of the financial burden when you’re forced to expand your family.”
Other elements of the Democratic package included bills that would create an infant formula tax credit, require insurance coverage for medically necessary donor breast milk, and provide free “baby boxes” to newcomers. parents taking a course on baby care. A baby box is a small, crib-like sleeping space for a newborn. It would come with instructions on safe sleep 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 should never have been taxed in first place”. Most states, including Ohio, do not impose sales tax on groceries.