During this year’s Oklahoma legislative session, the governor and House lawmakers sought to cut the state income tax and also sought to exempt groceries from the state sales tax. But Senate leadership refused, saying the Senate would vote only to provide the grocery exemption.

Senate leadership argued the grocery tax reduction would benefit lower-income families more, calling the grocery tax regressive.

But data show that upper-income households get much more benefit from the grocery tax repeal than lower-income households do, potentially receiving up to $3 in tax savings for every $1 provided to lower-income families.

And the savings provided to lower-middle-class families by an income-tax cut are roughly the same as the savings generated by the grocery tax change, according to estimates.

The real difference between the two tax proposals is that income-tax cuts are associated with greater economic growth since they boost the financial reward for investment and job creation.

Put simply, class-warfare arguments decrying an income-tax cut as a benefit for “the rich” ignore the fact that the same thing holds true for repeal of the sales tax on groceries. Those with more income to spend enjoy more savings when their spending is exempted from sales tax.

The U.S. Department of Agriculture reports that in 2022 “households in the lowest income quintile spent an average of $5,090 on food” while “households in the highest income quintile spent an average of $15,713 on food.”

Using those figures, the repeal of Oklahoma’s 4.5 percent state sales tax on groceries translates into $229.05 in annual savings for Oklahomans in the bottom quintile. For those in the top quintile, the tax cut would save about $707.09 per year.

The left-wing Oklahoma Policy Institute reached a similar conclusion. Citing data from the Institute on Taxation and Economic Policy, the Oklahoma Policy Institute estimated that an Oklahoma family earning $40,000 per year will likely save about $125 annually from the grocery tax change. The group estimated a family with income of more than $619,000 per year would save an average of $408 annually.

Those figures are in marked contrast to the rhetoric and estimates touted by those who opposed cutting the state’s personal income tax and instead favored lifting the sales tax on some groceries. In some instances, the estimated grocery tax savings touted by supporters now appear far off the mark.

In August, Senate President Pro Tempore Greg Treat declared, “The grocery tax is a regressive tax that impacts everyone every time they buy groceries.”

During the session, Democratic lawmakers, who joined Senate Republican leaders in opposing income-tax cuts, also praised the grocery tax change as providing more benefit to average families.

“I am pleased the Oklahoma State Senate has finally taken action on what we already know will help so many Oklahoma families,” said House Democratic Leader Cyndi Munson of Oklahoma City when the grocery-tax bill first advanced. “For the past several legislative sessions, including special sessions, the House Democratic Caucus has filed legislation to eliminate the state sales tax on groceries to provide immediate tax relief for working Oklahomans each time they go to the grocery store.”

In a February press release, Treat claimed that eliminating the grocery tax would save Oklahomans around $700 per year—a figure far above the savings that recent estimates indicate most families will enjoy.

On Jan. 31, when Republicans in the Oklahoma House of Representatives passed a bill to reduce Oklahoma’s top personal income tax rate to 4.5 percent, Democratic lawmakers dismissed the idea that an income-tax cut would benefit working families.

They did so despite the fact that Oklahoma’s top personal income tax is imposed on those with incomes of $7,200 for single filers and $12,200 for joint filers—or, put another way, people living in poverty.

House Bill 1002XXX would have cut Oklahoma’s top personal income tax rate from 4.75 percent to 4.5 percent. A fiscal impact statement indicated the tax cut could ultimately save Oklahomans up to $345 million annually. The bill never received a hearing in the Oklahoma Senate.

Munson said the income-tax cut would provide an additional $118 to those earning $47,000 and argued that was of little benefit to those families.

Yet that $118 in income-tax savings is almost identical to the $125 in annual savings the Oklahoma Policy Institute predicted would accrue to a family earning $40,000 a year after the grocery-tax change.

And lower-income families may receive even less benefit from the grocery tax change than what initial estimates indicate because fast-food purchases and many routine grocery-store purchases remain subject to the state’s 4.5 percent sales tax.

According to the U.S. Department of Agriculture, more than one-third of every dollar spent on food purchases in 2022 was spent eating out.

Determining what grocery store items are tax-exempt and which items are still subject to the 4.5 percent state sales tax is so complicated that the Oklahoma Tax Commission released a flowchart to help retailers.

According to that document, soft drinks in a can are now tax-exempt, but self-serve fountain drinks are not. A smoothie made by a manufacturer is exempt, but a smoothie made by a seller is taxed. Ready-to-eat cold chicken prepared by a seller and sold by weight or volume with no utensils is tax-exempt, but ready-to-eat cold chicken prepared by the seller and sold at a fixed price is taxed. A deli sandwich made by the food manufacturer is tax-exempt, but Oklahomans must pay sales tax when buying a deli sandwich made by the food manufacturer and heated by the seller. A pound of cooked shrimp, made by the seller and sold unheated, is tax-exempt, but a pound of cooked shrimp, made by the seller and sold heated, is taxed.

Grocery-tax repeal is also associated with higher sales taxes on other items.

In April 2022, the Tax Foundation found the poor actually pay more in sales taxes when states exempt groceries because the sales-tax rate on other goods is typically kept higher to make up the difference.

“The poorest decile of households experiences 9 percent more sales tax liability with a grocery tax exemption than they would if groceries were taxed and the general rate were reduced commensurately,” the Tax Foundation reported.