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Thursday, May 21, 2009

Tax on Soda: WSR's Position

It has come to our attention that the Obama administration is considering a tax on sugary beverages (including, but not limited to, soda) to fund the substantial cost of his proposed health-care reforms. Apparently, this tax would amount to something less than a dime of extra cost for a bottle of soda.

The soda tax seems, at first glance, like a good idea; consumption of sugary soda could certainly lead to health problems such as obesity and diabetes, so taxing it could pay for expanded health care while discouraging the behaviors which make that care necessary. Seems like a win-win.
In the end, though, I feel that the soda tax is a bad idea. Not a horrendously bad idea, just a not-so-hot idea. Maybe an "Abbondio Chinotto" bad idea, as opposed to a "Biotta Digestive Drink" bad idea.

The Kibbitzer-in-Chief has politely requested that I leave her out of this, so I'll just state my position on the issue.

I object in general to tax policies which are intended to manipulate behavior. While definitely left-leaning politically, I have a strong libertarian streak as well (which explains my tendency to end up completely indecisive). It seems to me that if you're going to have a government which does things that cost money, some sort of taxation will be required. However, to me it seems that those taxes should be levied in the most objective and neutral manner possible. I don't have a big problem with varying tax rates based on income, but I don't like the idea that certain behaviors should be taxed heavily (to discourage them) or produce tax breaks (to encourage them). In general, I would rather see people make their decisions about what to do based on what would be the best choice for them, not on which will avoid tax penalties or provide tax breaks.
Highly targeted tax policies also tend to be unjustly applied; why would sugary drinks be taxed, but not hamburgers and candy bars? And, along the same lines, they encourage increasingly elaborate behavior; this tax will presumably define the taxed beverages in some specific way, which provides a reason to try to redesign one's product to wiggle out of that definition. It'll ALL end up being Weird Soda, but Weird for tax evasion purposes, and that's not the good kind of Weird. I don't want to see "H&R Block Approved Grape Cream Soda: Drink By April 5 for Best Refund".

If the tax is passed, it would not inspire me to revolution (time for a Boston Kombucha Party!), but I imagine I'd heave a sigh. Or at least roll my eyes.


  1. The argument against such a tax is not purely a libertarianish one; lefties should object to the fact that such a tax would also be extremely regressive, burdening the poor far more than the rich. Additionally, while it's not a hard and fast rule, junk food tends to be cheap food. Taxation on cheap food forces the poor to spend more on food which seems like incredibly stupid policy especially as many familes are struggling to make ends meet.

  2. The Kibbitzer-in-Chief's argument was very much along those lines. It seems to me that it's not as regressive as, say, a tax on bread (since nobody has to drink soda), but it still seems like it would impact the poor much more than the wealthy, I agree.


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