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.