Tuesday, July 11, 2017
Christopher Anthony Cotropia (Richmond) & Kyle Rozema (Chicago), Who Would Benefit from Repealing Tampon Taxes? Empirical Evidence from New Jersey:
Many state and local governments exclude some medical products from the sales tax base, including some that are primarily used by men such as hair growth products. However, tampons and other menstrual hygiene products are subject to sales taxes in most states. A recent social movement advocates for the repeal of these “tampon taxes” on the grounds that tampon taxes (a) create an unequal tax burden between men and women because only menstruating women must pay a tax on products that men do not use, and (b) decrease the affordability of these necessary products, particularly for lower income women. To date, however, no empirical research has documented the extent that repealing tampon taxes would benefit women by lowering consumer prices, and how any tax benefit is distributed among women of different socio-economic backgrounds. It is possible that eliminating tampon taxes would lead to an increase in before-tax retail prices such that consumer prices for the products do not decrease by the full size of the repealed tax. This would imply that consumers and producers share the benefit of the tax repeal.
In this article, we use the 2005 elimination of menstrual hygiene products from the sales tax base in New Jersey as a natural experiment to study who benefits from the repeal of tampon taxes. We find that consumers obtain most of the tax benefit from the repeal, but that the tax benefit is not distributed equally. Low income women obtain a benefit from the repeal of the tax law by more than the size of the repealed tax. For higher income women, however, the benefit of the tax repeal is shared roughly equally with producers. The results suggest that repealing tampon taxes removes the unequal tax burden for menstruating women and could make tampons more accessible for low income women than previously thought.