Special Interests Mobilizing Against Taxing Health Hazards
As the Senate Finance Committee continues to look seriously at the idea of raising taxes on alcohol and commencing taxation of sweetened beverages, it’s natural that the industries that would be adversely impacted by such taxation are mobilizing lobbyists and astroturf to beat the ideas back. But what’s fascinating about Alan Fram’s account for the Associated Press is that nobody from the special interest community seems to have any actual arguments on the merits as to why this is a bad idea.
To step back and consider the issue, consider that any time there’s a push for higher taxes there are basically two kinds of arguments you can make. One is simply the fact that everyone would rather pay lower taxes rather than higher taxes, so you can always find someone to complain about being asked to pay more. But the other kind of argument is that higher taxes can have genuine deleterious effects on the economy. Advocates of eliminating the estate tax, for example, attempt to argue that the estate tax is a major barrier to capital formation, business expansion, and therefore job expansion. I don’t buy that argument, but you can see a clear connection between the argument and the policy outcome. A tax that badly hurt job growth would genuinely be a bad thing. A tax on public health hazards isn’t like that. It’s true that reduced alcohol consumption would have an adverse impact on jobs related to the production, sale, and distribution of alcoholic beverages. But by the same token, the funds spent on alcohol wouldn’t just be set on fire—reduced booze consumption would be offset by increased consumption of things that aren’t alcohol and by increased savings. Meanwhile, excessive alcohol consumption is associated with a lot of help problems, and not only problems for excessive drinkers—drunk driving and the linkage between alcohol and violence impose significant costs on other people. Mark Kleiman estimates that “Doubling the tax on beer (from a dime to twenty cents a can) would reduce the assault rate by at least 5%, and maybe as much as 20%.”
Meanwhile, you could get a healthy chunk of the revenue needed to pay for health care reform. All else being equal, of course, I’d like to see everyone pay low taxes for everything. I don’t want my beer to get more expensive. But at the same time, I do want to see comprehensive health care reform. So someone will have to pay something. And this is a pretty good option. The fact that the people who sell and market this stuff don’t want to pay the tax is, politically, a crucial fact. But on the merits it’s neither here nor there. Policymakers aren’t supposed to be serving the interests of the guys who make Coors Light ads or who make a living by selling an addictive substance to people with a serious problem.
28 Responses to “Special Interests Mobilizing Against Taxing Health Hazards”
Register
RSSLogin
Topic Cloud
ArchivesBlog RollAbout Matt YglesiasContact Me
Donate
June 4th, 2009 at 12:19 pm
I’m all for increasing taxes on alcohol, tobacco and carbon (and the rich). Just can’t get behind the sugar tax — don’t know why, exactly. Seems really u-american.
June 4th, 2009 at 12:28 pm
Meanwhile, excessive alcohol consumption is associated with a lot of help problems, and not only problems for excessive drinkers . . . .
Indeed. Just the other day, a merely tipsy person asked me for help calling a cab.
Anyway, I think a lot of lobbyists have been encouraged to be lazy by the nature of government over the past several years, meaning they have forgotten they are supposed to at least come up with some sort of policy argument to wrap around their special interest pleading.
June 4th, 2009 at 12:30 pm
And, God knows, before the crisis, the country (and the world) were really hurting for excess capital. What we need is stable liquidity, not rich people hoarding there wealth; or banks skimming it. Redistributive taxes, arguably, increase liquidity.
June 4th, 2009 at 12:40 pm
Luckily for the alcohol industry, people who make below $200,000 per year drink, so therefore President Obama must be against raising the tax.
June 4th, 2009 at 12:40 pm
And, God knows, before the crisis, the country (and the world) were really hurting for excess capital. What we need is stable liquidity, not rich people hoarding there wealth; or banks skimming it. Redistributive taxes, arguably, increase liquidity.
I agree with this. Why not just raise taxes on the highest brackets and capital gains rather than these regressive Puritanical taxes? These are politically easier? I just see them leading to bad place via a slippery slope. No doubt you’ll get the nag vote.
June 4th, 2009 at 12:44 pm
But how do you decide which things are bad and should be taxed. On the margins, is alcohol the product with the highest net negative externalities? What about black markets? Is it reasonable to assume that our political system would actually apply pigovian taxes in an efficient manner? Is that how you are deciding this? Or is it that alcohol seems bad to you? What if a tax on alcohol leads to an increase in cigarette use or to people buying products that involve a lot of CO2 emissions? If I were Coors I would argue that increasing the tax on my product represents an unfair singling out of my industry just because.
June 4th, 2009 at 12:45 pm
The fairest (though not 100% fair) tax we currently have on the table is the income tax because it is somewhat progressive. How can so-called progressives support these horribly regressive taxes? Everyone knows that raising the income tax (and coporate taxes) slightly is the best way to fund healthcare, but they are just politically afraid to do it. So instead we have to come up with these smoke and mirror taxes to hide what is really happening, all the while impacting the poor more than anyone else. That is not progressive.
June 4th, 2009 at 12:46 pm
Regressive = the working poor will have to spend a larger share of their income on some of the few pleasures they derive from life. In effect they’re getting a pay cut to their already meager income. But it’s good because some will live a day longer, even though their lives will be less pleasurable?
Tax the rich, and use the money for public health educationn. Let people make their own choices.
June 4th, 2009 at 12:51 pm
How can so-called progressives support these horribly regressive taxes?
Because while we wholeheartedly support your solution of higher progressive income taxes, there’s no chance whatsoever of that passing. So our choices are either to support revenue like this or risk having health care not pass because it’s not funded. Given those options, a regressive tax is the lesser of two evils. You work with the Blue Dog Senators you have, not the 60 Russ Feingolds you’d want.
June 4th, 2009 at 12:59 pm
This link doesn’t provide any backup to his assertions which seem incredibly dubious at best. Where’s the background data leading him (or others) to conclude that this wouldn’t just lead to:
a) a shift in type of alcohol consumed (cheaper and more potent) eg beer to malt liquour
b) Increase in bootlegging
c) Increase amount of moonshine
d) All of the above
June 4th, 2009 at 1:02 pm
Remember, moderate alcohol consumption makes people healthier, so that should be weighed in the balance.
On a more philosophical level, I’m more concerned about reducing hazards that people have no control over, rather than ones they freely choose. So, if the tax reduces the number of people killed by drunk drivers, that’s a big plus to me. If it reduces the number of people who die from liver failure due to alcohol abuse, its only a small plus.
June 4th, 2009 at 1:13 pm
This is pure bullshit
Let’s tax Venti latte’s that shit is way worse for you than god damn soda.
June 4th, 2009 at 1:16 pm
My previous post probably goes too far. I actually think that a tax on beer to get health care is a good idea. I just don’t agree with the notion that somehow the estate tax has legitimate arguments against it while the pigovian taxes are just perfect. There really are problems with pigovian taxes. In practice they can single out certain industries which lack political clout. An example I would point to is a tax on video games. I think you could make a case that violent video games lower peoples inhibitions to violence. it isn’t a strong case and the externalities if they exist are probably small. I think it would be wrong to tax them while doing nothing to other products such as violent movies with similar externalities but more political clout.
June 4th, 2009 at 1:20 pm
The other stupid thing about taxing liquor and soda is that theoretically this will reduce consumption so we’ll have to keep raising the tax further, which again will reduce consumption. So we get an ever-more regressive tax that gradually loses value over time. It’s really painful all the hoops we have to leap through to avoid single-payer, which is the only logical system–cheapest by far too!
June 4th, 2009 at 1:50 pm
I’m watching CNN, and they are having a grand old time yukking it up with a Louisville pastor who is asking people to bring their guns with them when they come to his services. Leading me to ask, “what is the tax on guns and ammo right now?”
With all the wingnuts hoarding weaponry, maybe raising taxes on it would be a good source of revenue, and might put fewer guns in the hands, of, well, idiots.
June 4th, 2009 at 2:02 pm
Sin taxes make the majority feel good, and if assessed on alcohol, might even affect that majority, but they’re still not fair. If all of society is to gain through taxation, shouldn’t all of society pay? Use the income tax. It’s far more progressive and has a much broader base than just boozers and smokers.
June 4th, 2009 at 2:21 pm
What zyxw said.
I’m a shamefaced but perfect example of this in action. A year and a half ago, Maryland raised cigarette taxes, and then the state passed a smoking ban in bars and restaurants, so the people who used to smoke inside bars had to go outside and, well, standing outside in the cold at night is a strong deterrent to smoking, so our little band purchases fewer packs of cigarettes, which means the state of Maryland is reaping the windfall that they estimated when they raised that excise tax.
How’s that for a run-on sentance!
June 4th, 2009 at 2:22 pm
Preview, damn it, preview button!
June 4th, 2009 at 2:25 pm
This isn’t even a sin tax, strictly speaking. It’s an excise tax paid twice a month by the brewery on each barrel of beer produced that scales based on the barrel’s %ABV. Ends up hurting microbreweries, who tend to operate on lower margins, hold inventory longer, and produce beers with more alcohol – which sucks!
June 4th, 2009 at 2:45 pm
A tax on alcohol could certainly be made progressive. The working poor don’t drink 7-year old scotch, at least not often. Nor do they tend to drink boutique wines, etc.
Just peg the tax to the price per liter, and specify which type of drink is affected by % of alcohol.
June 4th, 2009 at 2:50 pm
Tax the rich, and use the money for public health educationn. Let people make their own choices.
I’m all for progressive rather than regressive taxes, but nobody’s taking away “choices” by imposing taxes that seek to internalize external costs. In other words, drunks impose costs on the rest of society, so make them pay the rest of society back for the costs incurred. The carbon tax, the gas tax, congestion pricing – they are all based on the same idea.
If booze consumption falls, certainly it will make the tax raise less money, but it should reduce health care costs somewhat as well.
I mean, I love beer and all, but if prices rise so I choose to adjust my consumption by drinking less, rather than, say, eating less or switching to a cheaper cell phone plan, where’s the tragedy? To say my freedom of choice is diminished because a bottle of beer costs $0.25 more is just bizarre.
June 4th, 2009 at 3:59 pm
Elwood proves the point. Let’s say a poor couple likes to enjoy one beer each every day, for a grand total of $0.50 per day in taxes, or around $730 per year. That’s nothing to Elwood and those of means, but to the poor couple $730 might be two months worth of food bills. Regressive taxes are not progressive.
June 4th, 2009 at 4:33 pm
Ha! Bad math! Preview button please! I stand by my lousy argument anyway.
June 4th, 2009 at 4:46 pm
Considering the current economic environment & the gist of how it got that way, I’m calling B.S. on the idea that you couldn’t make the income tax more progressive or raise the corporate tax, rather than extract more money from the not-rich.
Start making more forceful arguments. Hell, start calling people who rail against corporate tax UnAmerican! It works when the Republicans do it to protect their precious military pork…
June 4th, 2009 at 6:23 pm
It probably makes sense to have some tax revenue from sources that aren’t as volatile as the economy.
I would like to see a “cigarette trash” deposit (10 cents per cigarette butt and something for the wrappers, boxes, etc.) to get smokers not to litter. The major component of litter these days is cigarette-derived trash — it’s okay to inhale the tobacco smoke but smokers can’t tolerate having the damn butts in their cars ! At least the panhandlers could scrounge around for cigarette butts and get rid of the endless litter. The retailers and the tobacco companies also should have to handle the consequences of the crap they sell and produce !
June 4th, 2009 at 7:36 pm
Genius, I tells ya, genius! I can see the headlines now:
“Democrats Place Sin Tax On Chocolate Milk To Provide Health Care To Illegal Aliens”
June 5th, 2009 at 10:01 am
Good idea, but you could make an even better (or additional) case for taxing junk food. Those in favor of a “sugary soda” tax are on the right track, but there’s a lot more cr*p in the grocery aisles than that. Subsidized corn has made food processed with bizarre corn derivatives cheaper than real food, and is a lot responsible for current obesity rates, which are helping to drive up everybody’s health care costs.
So a really good revenue-raising disincentive would be a tax on *any* processed food product that uses any ingredient made from corn. That’s a lot more stuff than you might realize, and would at least get back some of the ridiculous agribusiness subsidies. I’m thinking states could do it as a response to the feds outrageous ag policies.
June 5th, 2009 at 11:08 am
The mailing list of the American Homebrewers Association has been in a tizzy lately, since the Brewer’s Association (the parent organization) is doing a bunch of the anti-beer-tax-increase lobbying, but plenty of AHA members would happily pay the taxes, especially as part of a health care plan.