Tax Analysts Blog

Soda Drinkers: They're Fat So They Deserve It

Posted on Jun 3, 2009

The New York Times has joined the chorus calling for a new tax on sugary soda. The editors offer a variegated argument that nicely demonstrates the incoherence of this idea.

The soda tax, they say, would help discourage consumption of unhealthy drinks:

    The idea is that taxes worked to lower tobacco use — a habit far harder to break — so they should help young people limit their intake of soda or other forms of "liquid candy."
OK, so this tax is designed to deter consumption. Presumably, it will be set high enough to do that job effectively, just like tobacco taxes.

Or maybe not. The tax would also be a good way to raise lots of money for healthcare reform:
    Americans spend about $50 billion a year on nondiet sodas — even more when counting sugared teas and sports drinks — so even a small tax would add up.
Alright then: it will be a small tax designed to maximize revenue. In which case, it won't deter many carb-craving teens from downing a six-pack or three. But it sure will help raise a lot of much-needed cash.

Incoherence alert: a sin tax can either deter consumption or it can raise revenue. It can't do both. Or more precisely, it can't do both well.

A moderate tax will raise significant revenue, and it will also deter some consumption. But since the tax is highly regressive, it will be collected from those families least able to pay. Apparently, that's OK with the Times. Opponents of the tax, the editors say, have "ignored the fact that too many of these same families suffer from obesity and its related problems."

So fat people need us to save them from their appetites with a nice stiff tax. Then they will limit consumption and won't have to pay. Oh, that's right ... the tax is going to raise lots of money, so we can't set it high enough to actually deter much consumption.

So we'll use the money from this tax to help pay for the medical treatment of fat people. We could, of course, get the money from some fairer, more progressive tax. That seems reasonable, especially since the revenue will presumably be spent on programs that help not just the poor, but also the middle class and the rich.

But why bother? We can use this tax, dress it up in some moralistic public health argument, and avoid the political fight that would bedevil the enactment of a better revenue tool.

Historically, soda taxes have been a failure. And numerous contemporary critics (including my colleague Marty Sullivan) have ably outlined its many problems.

But the worst feature of a soda tax is the bogus moralism used to defend it. Reduced to its unappealing essentials, here's the ugly argument that lurks behind every high-minded defense of the soda tax:

We need money for healthcare reform. Soda drinkers are likely to pay up without much fuss. Many of them can't really afford to pay, but that's OK: They're fat, so they deserve it.

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