Tax Analysts Blog

Why the Tea Party Should Support Soda Taxes

Posted on Mar 26, 2013

Want to shrink the size of government? Then start by imposing a soda tax. It’s the quickest way to jumpstart a tax revolt.

In an article for the The New York Times last Sunday, Cornell economist Robert H. Frank endorsed a special tax on sugary sodas. “We have to tax something, after all, and taxing soft drinks would let us reduce taxes now imposed on manifestly useful activities.” In particular, he suggested, it might create budget room for cutting the payroll tax, which in turn would create jobs.

Frank is a very smart guy with lots of good ideas about tax policy. But this is not one of them. Like most supporters of taxing soda, he begins – and ends – with good intentions. In particular, he suggests that taxing soda would make it easier for parents to raise healthy kids.

Social pressure encourages kids to eat junk food, Frank contends, and parents need government help in countering that influence. He frames his case in terms of dueling freedoms: the freedom to consume what we want vs. the freedom to raise healthy kids.

      Being free to do something doesn’t just mean being legally permitted to do it. It also means having a reasonable prospect of being able to do it. Parents don’t want their children to become obese, or to suffer the grave consequences of diet-induced diabetes. Yet our current social environment encourages heavy consumption of sugary soft drinks, making such outcomes much more likely. So that environment clearly limits parents’ freedom to achieve an eminently laudable goal.

Honestly, if parents can’t protect their kids from the perils of a Big Gulp without the aid of Big Government, then they’ve got bigger problems to worry about.

It’s not like the pro-junk food element of our culture is the only – or even the largest – threat to raising healthy kids. Even if we accept that obesity is a uniquely serious problem, the soda tax is still a bad solution.

The problem with taxing unhealthy food is that there’s so much of it. Singling out one kind of food for a special tax is arbitrary and capricious. Sure, a tax might prevent one industry from harming our kids. But it would indirectly help a bunch of other industries selling competing forms of junk food. Call me crazy, but I’m pretty sure that kids have been seeking out junk food for a long time. If they can’t get it from the soda fountain, they’ll get it somewhere else.

But the even bigger problem with taxing soda is that it threatens the political legitimacy of the tax system more generally. As a rule, soda taxes are not popular. In July 2012, a Kaiser/Washington Post poll found that 53 percent of Americans favored a soda tax while 47 percent opposed it. But a November 2012 Associated Press poll found only 36 percent supporting such a tax and 60 percent opposing it.

Even if we accept the more favorable poll results, we hardly have a strong consensus in favor of taxing soda for the sake of public health. (Recent polls in California have suggested that soda taxes do better when the revenue is earmarked for popular spending programs. But the numbers still aren’t great, and earmarking is a dangerous game that degrades the legitimacy of non-earmarked taxes.)

And as a general rule of good government, you shouldn’t let regulatory taxation get too far ahead of public opinion. When it does, regulatory taxation can undermine faith in the tax system as a whole, making it seem heavy-handed and paternalistic. Is that what progressives really want? To make Americans even more suspicious of the tax system than they already are?

On the other hand, that’s probably exactly what anti-tax activists would like to see. Under the theory that “it has to get worse before it gets any better,” a soda tax could be just the ticket for anyone eager to fan the flames of tax rebellion.

Read Comments (4)

vivian darkbloomMar 26, 2013

The soda tax thing reminds me of the following line of TS Eliot in his Poem
"Choruses from the Rock":

"By dreaming of systems so perfect no one has to be good".

Joseph J. ThorndikeMar 26, 2013

I think that's a harsh assessment of Frank -- some of his ideas are great. But
I do think he's got the liberal's disease of thinking that taxes can solve just
about any social problem. The longer I'm in this game, the more I think taxes
are best when they just raise money. I keep telling liberals: the only thing
they should care about when it comes to taxes is "enough." If you want to
accomplish some social goal, then spend money on it directly. Use the tax
system to make sure you have enough money to do that spending.

I'm not against the use of taxes to correct for negative externalities, but I
think liberals should be very conservative (!) in choosing the moments when
that sort of tax activism is called for. I would endorse a carbon tax, for
instance, because the problem is big, the stakes are high, and the alternative
policy responses are not great.

But this food activism is ridiculous. Confirms all the worst suspicions about
progressive political ideology (that it's heavy handed, paternalistic,
anti-freedom, etc.)

David BrunoriMar 26, 2013

Joe, By Frank's logic everything he deems unhealthy or harmful can be subject
to taxation. There are people like Frank arguing that electronic cigarettes --
which cause no harm -- should be taxed. Their argument? Electronic cigarettes
make smoking look cool -- and that is harmful. Frank and his ilk represent the
worst in public finance thinking.

edmund dantesMar 27, 2013

We'll know that the anti-obesity crowd is serious when they start advocating
for the elimination of all farm subsidies, especially corn and sugar. Until
then, it's just nannyism.

Also, unless you are prepared for a massive conversion to nuclear power, a
carbon tax is economic suicide.

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