I'm compiling a list of people who propose terrible tax policy. Today's winner is Illinois Rep. Robyn Gabel (D), the sponsor -- and from what I understand, the mastermind -- of the proposal (HB 397) to adopt a soda tax to fight obesity in her state. The idea was to impose an excise tax of one cent per ounce on all sweetened beverages. The tax would not apply to artificially sweetened beverages. Apparently, folks in Illinois drink a lot of sweetened beverages because in addition to "doing good," the tax would raise $600 million a year!
HB 397 failed to get out of committee. But it illustrates that some people think the government is the answer to all problems. Obesity is a problem, but for some, it's a genetic problem having nothing to do with how many Dr Peppers they drink. Of course, taxing soda would decrease consumption. Or it might lead people to buy their Pepsi in Indiana. But blaming obesity on soda is silly. Why not blame Oreos? Quarter Pounders? Sitting in front of video games all day? Why not blame people who refuse to take personal responsibility for their health?
Gabel's proposal illustrates terrible tax policy (not that do-gooders care that much). It would have made the system more regressive. Like most liberals, Gabel is indifferent to imposing regressive taxes when it furthers an agenda. Some people would tax everything they find offensive.
But more importantly, the tax wouldn't work. It would tax a can of Coke, but if you went to Starbucks and dumped five teaspoons of sugar into your latte, there would be no additional tax. It's silly. There are many non-obese folks who drink Coke. Imposing a tax on them to pay for other externalities is neither fair nor effective. Soda taxes, like many ideas, are driven by the idea that politicians must do "something." I just wish they wouldn't impose their somethings on the rest of us.
This post is an excerpt of article that first appeared in State Tax Notes magazine.