Idaho's Grocery Tax

Fiscal Panic, Not Policy Design

The 1933 stampede had preconditions that made careful deliberation nearly impossible. Property tax delinquency had reached approximately 26% nationally, up from roughly 10% just three years earlier. Around 3,000 taxpayers' leagues had formed by 1933—up from only about 47 in 1927—but these leagues generally favored sales taxes as alternatives to property taxes. They were demanding different revenue, not opposing all revenue.

Mississippi had demonstrated that a 2% sales tax could generate immediate cash even in low-income jurisdictions. The Council of State Governments was founded in 1933—the same year as the stampede—with an explicit mission of interstate information-sharing. National Tax Association conferences in 1932 and 1933 gathered state tax officials to share administrative mechanics. Consulting firms like Chicago's Griffenhagen Company operated across state lines. Yet no single model bill has ever been located. The diffusion appears to have been facilitated but not orchestrated—professional networks lowered the practical barriers, and universal crisis supplied the motivation. Each state's adoption made the next state's adoption politically easier, until by mid-1933, not having a sales tax had become the unusual position.

The Fork: How Urbanization Determined Food Treatment

The critical design question—whether to tax food—correlated most reliably with urbanization, not with prior income tax status as conventional analysis might suggest. States above roughly 60% urban in 1930 (California at 73.3%, Illinois at 73.9%, Michigan at 68.2%) faced concentrated working-class political pressure and possessed diverse revenue bases that allowed narrow exemptions. States below 35% urban (Mississippi at 16.9%, South Dakota at 18.9%, Arkansas at 20.6%) relied almost exclusively on collapsed property taxes, had limited administrative capacity, and faced geographically dispersed opposition that was harder to organize.

California exempted food from its 1933 Retail Sales Act. Ohio adopted a 3% tax in 1934 with minimal exemptions—only milk and bread—and faced immediate political resistance. New York is frequently misattributed as a 1933 food-exempting adopter; in fact, New York State didn't adopt any sales tax until 1965. The confusion between New York City's 1930s local tax and a state-level adoption illustrates how errors propagate when secondary sources cite each other without verification.

Michigan complicates the urbanization thesis at the margins: at 68.2% urban, it was among the more densely populated adopters, yet taxed everything until 1975. Michigan had no income tax until 1967, making it dependent on broad-base revenue in ways that California—which adopted income and sales taxes nearly simultaneously—was not. Revenue architecture, not just population density, determined design capacity.

Most consequentially: food taxation appears to have been the unexamined default, not a deliberate choice. No floor speeches arguing for grocery taxation have been located in any 1933 legislative record. No committee hearings weighing regressivity against revenue have been found. States adopting "general retail sales taxes on all tangible personal property" taxed everything unless they specifically exempted it. Exemption required affirmative action; taxation required doing nothing. Most legislatures, desperate for cash and under extreme time pressure, simply didn't carve out exceptions.

The 1936 Backlash: Three States, Three Mechanisms

Three states acted against sales taxes in a single year—demonstrating that even Depression-era fiscal desperation had limits when governments taxed groceries.

Ohio's voters approved a constitutional prohibition of food taxation, 68.77% to 31.23% (1,585,327 to 719,966 votes). The strategy was sophisticated: keep the sales tax revenue source for non-food items while constitutionally prohibiting its most regressive application. By embedding food tax protection in the Ohio Constitution rather than statute, voters raised the reversal threshold from "a legislative majority during a fiscal crisis" to "a constitutional amendment supermajority." That protection has held for ninety years.

Kentucky's repeal was inseparable from the personal warfare between Governor Ruby Laffoon and successor A.B. "Happy" Chandler. The tax had passed in 1934 by exactly one vote in each chamber; Chandler ran against "Sales Tax Tom" Rhea and won the governorship by 95,158 votes. His decisive maneuver: knowing lobbyists would run out the 60-day session clock, Chandler adjourned after only 39 days, then called a special session with no time limit. The legislature voted 99 to 1 in the House and 36 to 0 in the Senate for full repeal—Kentucky became the first state to entirely abolish its sales tax.

Idaho's repeal came through direct democracy—citizens petitioned for a veto referendum and overturned the legislature's 1935 tax. Unlike Kentucky's elite-driven repeal, Idaho's had no named champion to carry the lesson forward. When Idaho re-adopted in 1965, it did so with food taxed. Kentucky re-adopted in 1960 with food exempted; Chandler's campaign had remained vivid enough to shape the redesign.

How Revenue Dependency Closes the Window

The 1936 backlash was real—and brief. By 1940, the window had closed. States that hadn't acted found themselves unable to act, because state budgets had incorporated sales tax revenue into spending plans, administrative infrastructure had been built and staffed, and the concentrated benefits of stable, predictable revenue for budget officials had created an organized constituency with strong incentives to preserve the status quo. The diffuse costs borne by millions of grocery-buying families—larger as a proportion of income for poorer families—generated weak, disorganized opposition. Normalization completed the lock-in: new voters entered the electorate having never experienced a world without the tax, and repeal became the "radical" position.

The lock-in durations speak for themselves. Michigan taxed food for forty-two years before exempting it. New Mexico for seventy-one years. Oklahoma and Kansas finally eliminated their grocery taxes in 2024 and 2025 respectively—more than nine decades after adopting them as "temporary emergency" measures. Ohio's constitutional protection, meanwhile, has lasted as long as the taxing states' inertia: ninety years, having survived every subsequent fiscal crisis precisely because the reversal threshold was deliberately raised in 1936.

What the Pattern Teaches

The 1933 stampede is not primarily a story about the Great Depression. It is a story about how crises compress deliberation time, how professional networks accelerate copying without ensuring careful design, and how the moment of adoption is the highest-leverage moment in a policy instrument's lifespan.

The food-taxing versus food-exempting split was not produced by careful analysis of distributional impacts. It was produced by which states happened to have urbanized economies that made food exemption politically available, and whether individual legislators—under extreme time pressure—remembered to carve out an exception. In most states, they didn't. The default prevailed.

The states that changed course in 1936 shared one structural feature: they acted before revenue dependency had fully formed. The two- to three-year window between adoption and lock-in is the most important interval in state tax history that nobody noticed at the time. By 1940, crisis-era choices had hardened into institutions. By 2026, they had hardened into the map of which states are still having the same argument they didn't quite have in 1933.