Soda taxes are the least popular item on the chart above. But why? Like cigarettes and alcohol, you aren't doing yourself any favors by consuming an abundance of soda. And like cigarettes and alcohol, unhealthy foods can have negative externalities -- namely, there seems to be some causal connection between obesity and the obesity of one's friends.
(It's also true that a tax on soda would, like a tax on alcohol or a tax on cigarettes, be fairly regressive. I think that's a fair objection, but it's one that should be applied consistently: Why not reject cigarette and alcohol taxes for the same reason?)
The best objection to the tax might be a good old-fashioned problem of line drawing. It's easy to draw a bright line between products that have alcohol and products that do not. It's easy to draw a bright line between products that have tobacco and products that do not. It seems quite a bit more challenging to draw the relevant distinctions between a sugary beverage with 97 calories per serving and a sugary beverage with 10 calories per serving.
I sympathize. But I'm not sure a problematic line-drawing issue is a good reason to get huffy over the tax.
Update: I think Kevin Drum has exactly the right solution to the line-drawing problem: Just tax the high-fructose corn syrup, not the products containing high fructose corn syrup! That seems like a smart idea.
The one point I would add to Drum's analysis is that you'd then have self-canceling public policy, since we currently give massive subsidies to the American sugar industry. It would be strange to subsidize sugar at one end, and tax it away on the other. At the very least it would create a gratuitous number of transaction costs.
Update # 2: I see my Atlantic colleague Corby Kummer has more on this.
(It's also true that a tax on soda would, like a tax on alcohol or a tax on cigarettes, be fairly regressive. I think that's a fair objection, but it's one that should be applied consistently: Why not reject cigarette and alcohol taxes for the same reason?)
The best objection to the tax might be a good old-fashioned problem of line drawing. It's easy to draw a bright line between products that have alcohol and products that do not. It's easy to draw a bright line between products that have tobacco and products that do not. It seems quite a bit more challenging to draw the relevant distinctions between a sugary beverage with 97 calories per serving and a sugary beverage with 10 calories per serving.
I sympathize. But I'm not sure a problematic line-drawing issue is a good reason to get huffy over the tax.
Update: I think Kevin Drum has exactly the right solution to the line-drawing problem: Just tax the high-fructose corn syrup, not the products containing high fructose corn syrup! That seems like a smart idea.
The one point I would add to Drum's analysis is that you'd then have self-canceling public policy, since we currently give massive subsidies to the American sugar industry. It would be strange to subsidize sugar at one end, and tax it away on the other. At the very least it would create a gratuitous number of transaction costs.
Update # 2: I see my Atlantic colleague Corby Kummer has more on this.
I imagine a tax on sodas is the least popular tax target because pretty much everyone likes a cold Coke on a hot day from time to time.
It does seem to me that it's hard to support taxes on alcohol and cigarettes yet oppose taxes on other consumables that are not necessary but are enjoyable. As for that bright line you're looking for, how about a tax on High Fructose Corn Syrup? There's probably as much anecdotal evidence that it's a problem as there is anecdotal evidence that soft drinks cause obesity and diabetes; HFCS is definitely a bright line; and it's in everything so the government should clean up revenue-wise.
Of course, there's also anecdotal evidence that artificial sweeteners tend to make people over-consume other high-calorie food - the guy who orders a Big Mac, a large fries, and a Diet Coke is a cliche after all - so I'd also like to see a tax on artificial sweeteners. Those with a medical need for them - like diabetics - could submit their grocery receipts and a doctor-signed form to get their taxes back.
And there you go. Americans would become so slender and thus so healthy we wouldn't even need the gold-plated health care the government could afford to buy for all of us with the money that would come pouring in.
I second the HFCS tax. If you're going to hit something, hit that. Too bad ADM will shoot that down faster than we can shoot down a missile, since it will kill their business (that was the whole point of the sugar tariffs from the 1980's: Allowed HFCS to become the main sweetener of everything).
You have an excellent point about ADM opposing a tax on HFCS. On the other hand, the public may be more supportive of a tax on HFCS than on soda and junk food so perhaps actual voters would serve as a counterweight to ADM.
(Disclaimer: I don't actually approve of any sales or consumption tax including those on alcohol and tobacco. But if the government is bound and determined to tax soda and junk food, I'd rather they do it as intelligently as possible. To me that means taxing HFCS - and crystalline fructose - not fighting about whether we're going to classify VitaminWater as a soda.)
"there seems to be some causal connection between obesity and the obesity of one's friends." I guess you can find a justification for any tax now. Gack.
Soon a majority of Americans will be fat and we can democratically pass taxes discriminating against thin people. You exercise and diet fanatics have it coming!
The soda tax strikes me as a nearly pure example of Nanny State thinking -- "please mommy government, spank me when I'm bad!" If you are fat, don't you have to give up all self-respect to support a tax on your own food like this? And if you aren't, don't you still have to think your fellow citizens are all cretins without self-control to support it?
The argument that soda has externalities -- creates medical costs for society, or god forbid, encourages your friends to get fat also, is an argument you could stretch to nearly anything. You are rejecting any limits on government power when you support stuff like this.
I also think this is another example of how an industry or product is demonized, and then loses all protection of law. Porn and alcohol are the traditional victims, but cigarettes and guns have gone the same route. Now food and medicine (those horrible Big Pharma people are lying to me!) will get the same treatment. No concept that all legal products should be taxed similarly, not discriminated against by our own government. No concept of individual responsibility for behavior, or any right to purchase legal products without paying "sin" taxes.
I know government is guilty of far worse ideas than soda taxes, but this one, perhaps because it's so frivolous, just disgusts me.
Soda is the most popular consumable on that list. Ergo, it's also the least popular target of taxation.
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The problem is that it's called POP, not soda!
Looking at that list, I'd have to think people just don't think their Diet Coke is unhealthy enough to have a socially manipulative tax on it.
While I was waiting for my comment to escape the moderation filter, I did some more thinking - and a post - about this. Two things. First, Drum does not suggest taxing only HFCS; he also suggests taxing sugar. I think this is a mistake since there's evidence that HFCS may be driving obesity for reasons beyond its calorie count.
Second, you can't have it both ways. Either a tax on soda (or HFCS and/or sugar) will fix the obesity epidemic - because people will stop drinking soda when it's taxed - or a tax on soda will raise lots and lots of money - because people will keep drinking soda even though it's taxed. It can't do both at the same time.
Or, the tax would raise money while reducing soda consumption, and creating incremental benefits to the nation's health--thus incrementally reducing health care costs.
I think losing revenue due to the American people giving up soda altogether is a problem this nation could deal with. We could live with that. Literally.
That’s fine, AgathaX, but then the revenue numbers have to take that into account. The Center for Science in the Public Interest says that a 7 cents per 12-ounce can tax on soda will raise $10 Billion. That works out to 143,857,142,860 cans of soda sold per year which tracks with their statement that the industry produces 526 12-ounce cans of soda for every American every year. (We back into a population figure of about 272 million.) In other words, the 143+ Billion cans of soda is the current level.
Meanwhile, the Congressional Budget Office says a 3 cent tax on a 12-ounce can of soda will raise $24 Billion over the next four years or $6 Billion per year. That works out to 200,000 cans of soda consumed per year - even higher that the Center number - which tells me the CBO is basing its revenue projections on the current consumption level staying the same. If as proponents of the tax claim, “the tax would lower consumption”, then the revenue projections from the Center and from the CBO must be adjusted to reflect that outcome.
BTW, I would also consider it perfectly legitimate to argue that the soda tax will not do anything to reduce consumption but it’s still justified because soda increases obesity, obesity increases health costs, and the tax is to help defray those costs. I might dispute the facts presented but the argument is logical.
What troubles me is that the main proponents of the tax are claiming it *will* reduce consumption while also projecting revenues based on consumption remaining the same. They're trying to sell the tax based on both yet both cannot be achieved. Either drop the claim that consumption will drop or adjust revenue projections to take the consumption reduction into account.
Finally, I apologize for my second sentence in my response to your later post. The phrase “what world do you live in” rubs me the wrong way.
Here's a really wild idea that we should try before taxing HFCS: STOP subsidizing the production of that stuff through farm subsidies that encourage way too much corn production.
Elise, these taxes are not unpopular because people enjoy a soda/pop from "time to time". What world are you living in? There are people who drink little else. Ever been to a discount grocery on food stamp day? Its depressing. And its not just carbonated drinks. Ever see carts loaded up with store brand soda, juice boxes (that don't contain juice), yoohoos, hawaiian punch, and gallons of sweet tea? And therein lies a problem with this tax. Does the drink have to be carbonated to be taxed? What if it has 100% of the DRA of a single vitamin? What if it has 2% of fruit juice? Or 12% Or 45%? What about YooHoo? What about Chocolate soy milk? What about bottled sweet tea? And what of apple juice--which is little more than nature's soda.
Rather than tax the soda, tax the packaging and the sugar/corn syrup, and perhaps artifical sweetener as well. Drinks with little or no nutritional value that are adding refuse to our landfills should be taxed, but taxing the soda directly will create silly inequities. And don't forget to tax the cups used by fast food restaurants too.
At the same time it would be nice to create a culture that utilizes public water fountains. I would love to see architecturally interesting, inviting water fountains located throughout town to fill up water bottles or just have a drink. I was out walking one day without my water bottle and was suddenly very thirsty. My only option for getting a drink of water was to go in a Starbucks and ask for one. Water fountains have disappeared as readily as pay phones. Lets bring them back.
Elise, these taxes are not unpopular because people enjoy a soda/pop from "time to time". What world are you living in?
The world where a light-hearted comment is supposed to turneth away wrath. Or just anywhere you're not.
What about diet soda? Would that NOT be taxed?!?!
How about getting rid of the sugar subsidies instead!?!
They are also bad for the environment.
It's the worst kind of unjust rent-seeking too.
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