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TRACKING THE BIG BUNNY ACROSS IOWA

March 24, 2008

The intrepid investigors from the Tax Foundation followed the Easter Bunny around Iowa to see how the roving rodent copes with Iowa's whacky sales taxes:

We limited our analysis to one state for the sake of simplicity. We chose Iowa for two reasons. First, Iowa was home to the ridiculous pumpkin tax, which stipulated that pumpkins that were intended to be carved but not eaten would be taxed and pumpkins that were purchased for cooking were not taxable. We blogged about this and the story made the rounds of the internet. Finally Iowa lawmakers came to their senses and did away with the tax discrepancy. As we were calculating the Easter Bunny's tax bill, it occurred to us that the same sort of policy could be applied to Easter eggs: A state could tax eggs that were bought for consumption but exempt eggs that were bought solely to be dyed or hunted on Easter but not eaten. Of course this sounds absurd, but it would be just as logical as the pumpkin tax.

...

The second reason we chose Iowa is that the state has adopted the Streamlined Sales Tax Project's definition of candy, which is taxable in Iowa even though most food is not. One of the changes is that food containing flour is not considered candy anymore, even if most rational people would argue otherwise. For example, classic Milky Way bars, which contain flour, are tax-exempt, while Milky Way Midnight (dark chocolate) bars are taxed because they do not contain flour.

Surprisingly, the Easter Bunny buys local. He must lack Santa's transportation infrastructure. Here's what it cost him to hop around Iowa to fill an Easter basket:

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