Soda Taxes
Nick Kristof makes the case for a soda tax:
Mr. Paterson suggested the tax — an 18 percent sales tax on soft drinks and other nondiet sugary beverages — to help raise $400 million a year to plug a hole in the state budget. But it’s also a landmark effort that, if other states follow, could help make us healthier.
Let’s break for a quiz: What was the biggest health care breakthrough in the last 40 years in the United States? Heart bypasses? CAT scans and M.R.I.’s? New cancer treatments?
No, it was the cigarette tax. Every 10 percent price increase on cigarettes reduced sales by about 3 percent over all, and 7 percent among teenagers, according to the 2005 book “Prescription for a Healthy Nation.” Just the 1983 increase in the federal tax on cigarettes saved 40,000 lives per year.
I think there’s a reasonable case to be made that diet soda shouldn’t be exempt from the tax. I’m a Diet Coke man myself, but my understanding is that the research into how much healthier that really is is somewhat ambiguous, and I think enforcement of a soda tax could be made a lot easier if we didn’t add exemptions. But Kristof is on the right track here. As liberals tend to do, I would like to see the government spend more money on infrastructure and social services. I think it’s important that we pay teachers enough to recruit an adequate number of people into the profession. And beyond teaching, we probably need to spend more on a range of civil service salaries. We need to upgrade our infrastructure and we need to make sure children aren’t going hungry. We need to do a whole lot of stuff, and it would cost a whole lot of money to do everything I’d like to see us do. A lot of money can be found for that stuff, over the long run, by reducing the amount of money we spend on non-productive things like defense and medical waste. But ultimately there’s some need for taxes.
And while tax increases to fund useful services are things worth doing, it is worth considering the economic impact of taxes. Taxing the work people do can have a net beneficial impact on the economy if the tax revenue is spent on something adequately useful. But all else being equal, it does create a drag on the economy. Taxing cigarettes and soda and so forth, by contrast, mostly pushes people toward better healthy outcomes and therefore does something to boost quality of life and economic growth. And on top of that, it creates revenue that can be used for useful things. You wouldn’t want to try to fund the public sector entirely through vice taxes lest you wind up with black markets, perverse incentives, and a highly regressive code. But levied at a moderate rate, vice taxes can raise a lot of funds while having a modest-but-real positive impact on lifestyle choices and health outcomes. It’s something we ought to rely more on.
65 Responses to “Soda Taxes”
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December 19th, 2008 at 3:33 pm
As could be expected, MattY is behind the curve. Rep. Bob Filner has introduced HR 2374, aka the “Keep America Moving Act” (KAMA). It would impose a 25% tax on Barcaloungers and other “comfort chairs” which encourage people to laze about and thereby gain weight and thus become a burden on the state through increased healthcare costs. Why hasn’t MattY gotten behind that?
December 19th, 2008 at 3:34 pm
Taxing cigarettes and soda and so forth, by contrast, mostly pushes people toward better healthy outcomes and therefore does something to boost quality of life and economic growth.
Why not better environmental outcomes? In that case, we can also justify taxing bottled water — given the negative externalities of the bottling process, reducing consumption is a sound idea. We can then use the revenue to improve tap water filtration systems and related infrastructure.
December 19th, 2008 at 3:37 pm
Rep. Bob Filner has introduced HR 2374, aka the “Keep America Moving Act” (KAMA).
Is that the same hypothetical fellow who introduced the Safe Utilitarian Theory Revitalization Act (SUTRA)? Lechery fellow, he is.
December 19th, 2008 at 3:40 pm
Soda could be banned tomorrow and this country would still be full of morbidly obese people. Vice taxes succeed primarily in punishing addicts and letting lawmakers raise revenue without having to make a political hard choice. And I’m not sure the government should really be charging headlong into a system of punishments and rewards for the foods people buy.
December 19th, 2008 at 3:46 pm
Stay away from my Diet Coke, commie. From. My. Cold. Dead. Hands.
December 19th, 2008 at 3:47 pm
If you are going to tax Diet Coke, you should also tax coffee. It would be unfair to target my source of caffeine and not everyone else’s. Better, I think, to target the shit with corn syrup in it on the grounds that you are just taking back a subsidy….
December 19th, 2008 at 3:52 pm
Why not just do a per calorie tax?
December 19th, 2008 at 4:00 pm
right, consuming calories isn’t a vice. Most people need 2000+ calories per day. Athletes need more. Taxing calories is a bad idea.
December 19th, 2008 at 4:05 pm
Surely the federal deficit could be paid off if we just taxed obese individuals. Don’t penalize businesses selling perfectly safe products if only they were consumed in moderation. Legislate an agreed upon optimum BMI and require citizens to weigh in once a year. Establish a dollar penalty for excess weight and add it to the amount due on their federal tax filing. Allow the states to do the same. If you want to consume Coke and cheeseburgers around the clock pay the penalty for it. Sure, many would come up short on their ability to pay. There are provisions already in place for such scofflaws. Liens, collections, wage garnishments, etc all are employed. Sucks$$ to be fat. Don’t like it? Shut your pie hole a bit more. Don’t be swilling perfectly legal Pepsi products.
December 19th, 2008 at 4:06 pm
What the under/over for how many posts before the words “nanny state” shows up?
December 19th, 2008 at 4:07 pm
1) Regressive.
2) This would be awkward in states that have bottle deposits.
3) Just cut the damned subsidies if you want to save money and jack up the price.
4) Less lifestyle engineering, please. I’m not a Republican; f we need the money, I’m not opposed to raising taxes– but don’t do it because you think you’re doing me some kind of favor by jabbing my wallet every time I buy a Pepsi Max.
December 19th, 2008 at 4:11 pm
Why shouldn’t we tax whole milk and fruit juice as well? The fact so many people think those are actually good for them means a tax might have an even greater impact. It’s always unfortunate when we tax (or ban) some vices and not others based on what’s politically convenient.
December 19th, 2008 at 4:12 pm
I am in favor of consumption taxes, as a rule, and I think this is an ok idea. Not a great one, but ok.
December 19th, 2008 at 4:13 pm
Nightmare waiting to happen. If they tax sugared soda but not artificially sweetened soda more people will buy the diet soda…. maybe. Diet soda sucks until you get used to it. Tax both of them and people may just start buying seltzer and syrup and making their own. Real easy to do. If they tax seltzer it’s real easy to make your own seltzer from tap water and reasonably cheap cartridges in a seltzer maker.
http://www.nytimes.com/2007/10/10/dining/10fizz.html
December 19th, 2008 at 4:17 pm
Patterson sure has TheNextRight excited.
Arbitrarily taxes and subsidies on consumer products are always a bad idea which distort the market with serious negative consequences.
Why soda and not gatorade or tang or tonic water or sparkling water and juice? Or why not something completely different like krispe kremes or dunkin donuts?
What we need to do is END agricultural subsidies which distort the market, not target arbitrary food products in the name of public health which further distort and complicate accounting.
Promoting crap ideas like this soda tax is what give liberals a bad name. Get real and spare us the nanny state.
December 19th, 2008 at 4:18 pm
Just legalize pot and get it over with.
December 19th, 2008 at 4:20 pm
Wouldn’t it be sensible to at least stop subsidizing corn syrup and sugar production first? Otherwise it amounts to taxing the consumer and subsidizing the provider of something you’re trying to eliminate.
December 19th, 2008 at 4:21 pm
I don’t drink soda, nor sell it, etc. I’m not against taxes. I do live in NY. IMO, this is just STUPID. I’m sure this stuff looks good on a spreadsheet – “If we tax abc at x%, we get $zzz additional revenue.” But, IMO, the maze of different fees and taxes, rates and categories just seems like it must be stifling. Every store has to track these things, and that must have a cost.
I would rather see taxes be simple and straightforward. OK, tax sales and income and property. But, treat things the same. If you want more revenue, raise the rates. Be honest.
Besides that, I seriously question the idea that tweaking tax rates in the state budget is the way to better health. If they really think that’s what they’re doing, they are (IMO) disturbingly shallow. Even for NY.
December 19th, 2008 at 4:21 pm
Adirondacker, don’t suggest buyers steer around consumption taxes. I like beef jerkey. Hunting down and killing dehydrated cows would suck.
December 19th, 2008 at 4:26 pm
A better move that the Federal government could easily implement would be to require every school district receiving any federal money (a la drinking age requirement and highway funds) immediately halt the sale of foods and drinks that aren’t part of a recommended diet. Make it a phased in law starting with elementary schools for 5 years, middle schools for 3 years, and then high schools so that you aren’t throwing kids out of whack right away if you’ve got to.
This would go further to reduce consumption of this stuff by the most vulnerable population than a tax (at least when the tax is relatively tiny like the one Patterson’s proposing; cigarette taxes work because they’re fucking massive). To this day I have no clue why half the kids in my middle school growing up were allowed to come out of the cafeteria kitchen with chicken fingers and twinkies… Judging by the ever increasing weight of children, I can’t imagine that it’s gotten much better since then.
December 19th, 2008 at 4:30 pm
If you want to tax the addicted, then tax soda and target the revenue exclusively to address childhood obesity or something along those lines, rather than trying to balance the budgets on their backs. In the meantime, may I point out that unlike NJ where income over $500,000 is taxed at higher rates, NYers who make $40,000/year are taxed at the same 6.85% rate as those who make $4,500,000/year. Addressing that, our un-progressive state income tax, might be a good way to start increasing revenue, and only then we should consider modest across the board income tax increases.
December 19th, 2008 at 4:44 pm
You post about how lame the level of debate is about fixing poverty as it relates to education and now you jump in with both feet in this microtargeted tax that screams lame and unserious. There are 13g of sugar in my maple and brown sugar instant oatmeal. Give me a nutritional reason why that sugar shouldn’t be taxed at the same rate as the 44g of sugar in a can of cola and I’ll listen. Otherwise it’s a bunch of do-gooders who are too chickenshit to tackle large problems but still want to show off their “I care” chops to voting constituencies like mommies how much they care.
Cigarettes are more addictive than heroin and cause cancer. The same can’t be said for sugar so let’s stop the ridiculous health comparisons to cigarettes.
December 19th, 2008 at 4:51 pm
not just ambiguous, some studies have shown that diet soda drinkers gain more weight from the soda, after mitigating for other factors. the body treats aspartame as sugar/calories, even if we don’t count it as such on the labels. stores it as fat, just like any other sugar. la di da.
December 19th, 2008 at 4:57 pm
and the truth is, there is a lot of really, really regressive taxation in Paterson’s budget, it is a pretty contemptible piece of legislation, especially considering the fact that he absolutely refuses to even consider raising taxes on the rich.
sales taxes are bad, period. and the fact that he’s getting credit for this silly, gimmicy soda tax, instead of attention being paid to the fact that he’s trying to balance the state budget which was knocked out of whack by criminal millionaires at the expense of the poor and middle class who had nothing to do with cheating the public out of this money, pisses me off.
December 19th, 2008 at 5:05 pm
Why don’t we tax male homosexuality?
Or just tax anal sex in general?
Anal sex has caused a lot more health problems per capita than soda.
Why is it okay to use “vice taxes” to punish unhealthy consumption, while our sexual lifestyles are off-limits?
December 19th, 2008 at 5:15 pm
Re: Why is it okay to use “vice taxes” to punish unhealthy consumption, while our sexual lifestyles are off-limits?
I realize your post is somewhat tongue-in-cheek, but since sex acts take place in private, and aren’t usually (or legally) bought and sold, taxing them is impractical.
And by the way, perfectly “normal” missionary position sex isn’t trouble free: syphillis, gonorrhea, herpes, unwanted pregnancies.
December 19th, 2008 at 5:26 pm
“…it’s a bunch of do-gooders who are too chickenshit to tackle large problems but still want to show off their “I care” chops to voting constituencies like mommies how much they care.”
This could be said of many other things politicians do. “Caring” and “sensitivity” (however contrived) earn lots of brownie points in our Dr. Phil/Oprah society
December 19th, 2008 at 5:28 pm
Onceler – The number of calories aspartame contains is negligible because of the quantities used. Even the studies you’re referring to concede that and come up with a variety of theories (many psychological) behind the weight gain.
December 19th, 2008 at 5:35 pm
Might a soda tax/cigarette tax lead to net negative revenue as increased lifespans increase healthcare costs, social security costs, etc.?
December 19th, 2008 at 5:39 pm
How about a TV tax? Or better yet, a XBox 360/Playstation 3 tax? Or even better, a video game tax? (Except for the Wii Fit, of course.)
December 19th, 2008 at 6:36 pm
How about a tax on a blog’s misspellings? Seriously, nice point from Njorl about subsidies to corn syrup.
On the legitimacy of the tax, I’ve mixed or no strong feelings. I see the need for money and the point of discouraging certain kinds of consumption. I see the objections to a regressive tax, the nanny state, and the contradictions of a policy that appeals to revenues from conduct it also wishes to discourage.
What’s more interesting to me has been Kristof’s point about cigarette taxes in contrast to some of the more strenuous objections, often as with cigarettes allied to the businesses wishing to avoid discouraging consumers. You keep reading a triumphant hah! If you really could teach people how to behave, cigarette taxes would have put them out of business. But Kristof’s got the data that the taxes did have an effect. So, quite aside from whether you or I want this tax, distrust the fact-free universe of the pro-business types. They just never give up.
December 19th, 2008 at 6:45 pm
Anal sex has caused a lot more health problems per capita than soda.
Counting the mental health problems of homophobes like you, Shitstirrer, you’re probably right. Heroic trolling attempt, though, given that you were probably typing with one hand.
December 19th, 2008 at 7:29 pm
One problem with the comparison is that cig taxes are always (I think) a flat rate per pack, while this proposal is a percentage. So first of all, it punishes the boutique producers (who need to charge more for their product) than Coca Cola. And from the consumer point of view, there is high variablity even for the same soda product depending on how much you buy at a time. 20 oz is around 1.25 or 1.50 when purchased individually and cold, but if bought in bulk at costco, would run less than 33 cents apiece. So the large consumer is actually paying less (on a per oz basis), which I think is the opposite of pigouvian. There is also the anti-progressive element; the upper class costo buyer is paying less taxes than the inner city bodega buyer for the same product – although I have said that progressivism in every single form of tax is overrated. Still, this is definitely a more regressive tax when compared to each individual paying the same level of tax per unit product (e.g. gasoline for the most part).
December 19th, 2008 at 7:37 pm
On another note, one of the best things to happen to the Philip Morris company (and other big tobacco companies) is high cigarette taxes. It has guarenteed them a fairly reliable market share (which helps them keep their dividend high). Competitors with higher quality may be able to compete with them, but the going is difficult for lower quality, lower priced competitors. If the difference between a pack a cigarettes is 6.00 bucks for the name brand, but 5.50 for the off brand, why not go with the name brand?
December 19th, 2008 at 11:28 pm
A soda tax. Great way to usher in the Obama era. It’s change I can believe in, all right.
December 20th, 2008 at 3:19 am
Make that a corn syrup tax. that poison is in everything, and we could add the other artificial sweeteners as well. Real surger is not quite as bad for you and a lot more expensive.
December 20th, 2008 at 9:54 am
JonF,
Re: I realize your post is somewhat tongue-in-cheek, but since sex acts take place in private, and aren’t usually (or legally) bought and sold, taxing them is impractical.
The problem with that explanation is that many of these cheerful sexual nihilists would happily legalize prostitution, anonymous sex through a hole in the wall in the public restroom, couples advertising for ’swinging’, and other loathsome acts which are either commercial or public and therefore fair game to be punished with the full force of the law. I think the point here is correct- too many of today’s sexual nihilists are unwilling to morally condemn any lifestyle, no matter how depraved.
December 20th, 2008 at 11:25 am
My God! Where does it end? The answer is that there is no “end” and never will be; the Nanny Staters will never stop trying to “perfect” our behavior through application of govt power.
I say put the info out there (e.g. caloric info on sodas) and let people make their own choices. If soda is so frigging bad for us, why not just ban it? Or maybe the issue isn’t that soda is bad for us; maybe this is just a fig leaf for yet another tax hike.
December 20th, 2008 at 12:02 pm
If this happens, I’m leaving
December 20th, 2008 at 12:35 pm
How about a tax for stupid ideas proposed?
Leave people alone; spend less and stop thinking of ways to get into our wallets.
December 20th, 2008 at 1:00 pm
Tax policy has somehow morphed into the preferred method of forcing “social engineering” changes among the populace. In other words it is no longer a tax, but a fine for behavior that the tax creator (and lobbyists in favor of the behavior change) consider criminal. While there is certainly evidence to support the view that certain behaviors are self-destructive, fining such behaviors without due process is unconstitutional. A citizen is not to be deprived of life, liberty or PROPERTY without due process. Using the tax code to shortcut due process is something to be ashamed of, not celebrated.
December 20th, 2008 at 3:33 pm
From the perspective of the soda tax as policy incentive, exempting diet is stupid. Most people who are concerend about their weight already drink diet soda. Which says to me that either (a) diet isn’t actually better for your or (b) soda is not at fault in obesity issues. Or both. I think the high-fructose-corn-syrup tax (as opposed to subsidy) is a good idea though, because it’s just bad stuff.
December 20th, 2008 at 3:51 pm
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December 20th, 2008 at 8:59 pm
A sales tax on soda is suppose to raise $400 million? When has government ever been right on tax RAISING projections? Yeah… right… This year you’ll get a “$400 million tax on sodas”. Next year – due to the tax raising shortfall – you’ll get a new tax on fast food, or ice cream, or NY stacked high deli sandwiches.
New Yorkers use to be considered smart. Now you are all just buying into the lates Madoff like ponzi scheme like country bumkin rubes.
December 20th, 2008 at 9:42 pm
Tax policy has somehow morphed into the preferred method of forcing “social engineering” changes among the populace. In other words it is no longer a tax, but a fine for behavior that the tax creator (and lobbyists in favor of the behavior change) consider criminal.
James Yardley: your comment is lame. Nobody considers smoking or drinking criminal. They’re activities that are potentially dangerous — and the health problems they’re associated with cost us all money. Since history has shown that prohibiting dangerous substances generally doesn’t pass cost-benefit analysis, the way to deal with them is taxation (and regulation and education). You no doubt would like it if fifty million Americans took up smoking, would you?
December 21st, 2008 at 12:46 am
Ever notice how the things that are always recommended for special taxation are the things that liberals generally dislike and do not either purchase or consume on a regular basis? Hence, you will never see a special tax on such things as large waterfront homes in Malibu or Martha’s Vineyard, luxury cars or private jets, no matter how much damage these things might do to the environment.
December 21st, 2008 at 9:10 am
A tax on soda would be incredibly regressive.
December 21st, 2008 at 11:32 am
Somehow I think a carbon tax that a lot of liberals would like would hit luxury cars and private jets. Despite all the talk of the Palins of the world about liberals being rich elitists, most liberals, like most Americans, are middle class.
Besides, I’m liberal and I smoke (though not much) and if cigarette taxes have on balance been good for public health, then I’m willing to pay the tax.
December 21st, 2008 at 3:16 pm
Ever notice how the things that are always recommended for special taxation are the things that liberals generally dislike and do not either purchase or consume on a regular basis?
Since when did liberals become tee-totalers?
December 22nd, 2008 at 8:06 am
i’ve been screaming for a fat tax i.e a tax on obesity for years!
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