Tax Analysts Blog

Cheeseburger, Fries, No Coke

Posted on May 13, 2009

In its noble effort to expand health insurance, Congress is considering the silly idea of taxing "sugary beverages." Yes, we all know soda pop is bad for your teeth, your waistline, and the paint on your car. But that doesn't mean taxing the evil liquid is such a hot idea.

On May 12 the Wall Street Journal reported on the Senate's interest. And on that same morning some economists were making their case for the tax on Capitol Hill. Apparently the original source of the idea comes from a recent article published in the prestigious New England Journal of Medicine.

Like all "sin taxes" a tax on soda pop would disproportionately burden low-income families. But the real problem is its egregious overstepping on personal choice. In this modern world, when our eyes are not glued to TV and computer screens, we are driving ourselves door-to-door in empty vehicles.Then there are snacks everywhere. We make so many unhealthy choices in our lives it is hard to know where to begin. Why should the Coke drinkers pay more than the Frito eaters?

A huge problem with the tax is administration. We tax alcohol and cigarettes for the same reasons we want to tax soft drinks. But there would be a big practical difference. Booze and smokes are regulated. They are easy to tax because we know exactly where and what they are. The tax collectors' job is easy because they just piggyback on a well-developed regulatory structure.

Sugary drinks are unregulated. If we want to tax them we will have to build a soda pop bureaucracy. And it will not be pretty. Some poor bastards at the Treasury will be working full time telling us why a Frappuccino in a bottle is taxed but coffee in a styrofoam cup with sugar packets on the side is not.

State governments throughout the nation have tried all types of snack taxes and they invariably end up a sticky mess.

All these objections notwithstanding, don't be surprised if Congress holds its nose and passes this stinker. With debt skyrocketing faster than even the Chinese can buy it, Congress is more desperate than usual for money. And there is historical precedent. In 1990 our nation's leaders negotiated for months on a deficit reduction package and ultimately they had to adopt awkward excise taxes on "luxury" items.

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