Every year, $400 billion ends up in dumpsters, and since it reduces corporate earnings, businesses may claim it as a tax deduction.

As much as 40% of all food in the United States is wasted. Every year, this amounts to more than 100 billion pounds, or more than $400 billion. Tossing food while 38 million Americans, including 12 million children, go hungry is not only wrong, but it also puts grocery businesses out of business. Food waste accounts for an estimated 4% of Kroger’s almost $140 billion in yearly sales, or around $5.6 billion. That is for a company that is actively attempting to decrease it. Some retailers have an annual amount of food loss, or “shrink,” ranging from 5% to 7%. Those who reach double digits usually only live long enough to be rolled up or bankrupt.

However, there is a tremendous disincentive to improving and eliminating the issue. Because throwing away food reduces company revenues, the Internal Revenue Service considers it tax deductible. Because the statistic isn’t broken out individually, it’s unknown what proportion of deductions are attributable to food waste or how much grocery firms claim. However, this is how taxpayers find up paying the tab for food that ends up in the trash.

It is estimated that the typical supermarket in the United States wastes between $5,000 and $10,000 worth of food every week.

Food waste is not a line item on tax forms. Accounting terms refer to it as an influence on a company’s profit and loss statement. Because ingredients are raw materials, food counts as an inventory asset. There is a food expense for each given accounting period because of how it is written off. The food cost is determined by what is left in inventory and how much food has been consumed. That is the amount subtracted from inventory as consumed.

According to the advocacy organization Refed, more than $2 billion will have been spent in food waste “solutions” by 2021. In the years that Refed has been monitoring the data, that was the most money ever spent to the issue.

Food waste also has an environmental cost. When it is disposed of in landfills, it generates methane, a powerful greenhouse gas that contributes to increased emissions that heat the earth. According to the EPA, food loss and waste in the United States cause 170 million metric tons of carbon dioxide equivalent greenhouse gas emissions per year, which is comparable to the annual carbon dioxide emissions of 42 coal-fired power plants. Food waste accounts for 8% of total greenhouse gas emissions worldwide.

If a grocery shop or food supplier gives and monitors wasted food, the company may be eligible for a tax credit that doubles the amount of the tax deduction.

Source: Forbes

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