

Why the Soda Tax makes us angry; people do what they're forbidden - mootothemax
http://www.slate.com/id/2255127/pagenum/all/

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patio11
Soda taxes are also a regressive tax on the poor, as are almost all
consumption taxes. Let's see, back of the envelope math: I drink about $5 of
soda a week, stipulate a 3% effective tax rate, that implies I 60 cents of
soda taxes a month, or less than .02% of my income. By comparison, a poor
mother with two kids might well buy $25 of soda a week (three mouths plus they
consume it more than I do), paying $3 of sin taxes per week, which could be
over a full percent of her income.

The prospect of that _enrages_ me, _far_ more than my opposition to tax
increases in general.

~~~
sailormoon
The whole point of the tax is to discourage consumption. If Ms W. Queen can't
afford the tax to feed concentrated diabetes inducer to her little angels,
then good! Success!

Non-diet soda is almost as bad as cigarettes and we should tax the freaking
hell out of it.

~~~
profgubler
It depends on how high the tax is and how elastic the demand for soda is. If
the soda tax isn't high enough than people will continue purchasing and pay
the tax. An extra couple of cents on a can of soda likely won't change
consumption and will only hurt the poor more.

I am guessing that the elasticity of soda is a lot higher than cigarettes so
it would take a lot smaller of a tax to change behavior. And to be honest most
sin taxes are really not there to change consumption they are their to make
money because they know people will pay for it.

Look at the recent increase in the cigarette tax that is supposed to pay for
S-Chip. They don't want smokers to smoke less, because that would reduce
revenue and prevent them from paying for the program. They set the taxes at a
level that will maximize revenue and not greatly affect consumption.

Update: I just read here [http://seekingalpha.com/instablog/137417-wall-
street-strateg...](http://seekingalpha.com/instablog/137417-wall-street-
strategies/27919-soda-tax-a-health-concern-or-just-another-tax) that the new
england journal of medicine says that the price elasticity of demand for soda
is -.8. What that means is that demand for soda is inelastic. This means that
soda is just like any other sin tax. It is not meant to actually reduce
consumption. It is meant to create revenue. Yes some people will consume less,
but the vast majority will not consume less. So I hate to say it, but this
isn't a tax for the health of the American public, but a tax for the wallet of
government.

~~~
yummyfajitas
There are two purposes to a sin tax: reducing consumption or compensating
society for the loss caused by the sin. A perfect sin tax is set at such a
level that no one needs to care which one occurs.

If a soda drinker inflicts $0.03 / soda on society, the perfect sin tax would
also be $0.03. In such a regime, I don't care how much soda you drink since
you are paying for your own health care via the sin tax.

~~~
profgubler
Yes, the externality is being paid for in that instance, which depending on
your viewpoint is a good thing. But if that is the case that we only want to
pay for your stupidity in drinking soda, than they shouldn't be pitching
something that is for the health of the people, because it isn't.

Which brings us to the entire problem of a government run health care program.
Anything deemed bad for us will be taxed and pitched as the fact that it is
for the health of the people instead of to cover the costs of your choices on
society.

And yes, I realize that a person who drinks a soda in a free market healthcare
system still affects the cost of my insurance, however it is to a far less
extent than when I am the one paying for my neighbors drink.

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bballant
Ironically, many NYC public schools have Snapple machines (I think the city
has a deal w/ the company) with all sorts of sweet beverage enticements. The
older students often go to MacDonalds, which seem to thrive in poor
neighborhoods near schools, because the cafeteria lunch is so bad. It seems
Bloomberg emphasises how the tax revenues could be used to fight obesity
because he realizes a tiny price increase will have no real effect on
consumption.

I also find it ironic that the federal gov subsidizes the production of corn
syrup while local governments try to tax its consumption.

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akmiller
I've never understood these types of taxes. Whether it's the fat tax or the
cigarette tax.

If you have a real need for additional revenue to support specific programs
then why base that revenue on something that you would like to end. If you get
what you say you want (i.e. reduced consumption) then your revenue decreases
which will force you to find another source of revenue.

This really only makes sense if they know there is no way that it will reduce
the activity they are taxing. In that sense I think the author is wrong. I do
believe there is a small group that will react quite strongly to taxes like
these but there is usually a larger group that seems to support them. They
don't see it directly having a huge affect on them so it's easy to get behind
it and feel good about it as you are helping to make people healthier.

Of course if the revenue gained by taxing these products was ONLY used to
fight issues caused by them then the tax could potentially be successful
because as usage waned then you think you'd need less revenue to support the
resulting effects of consuming those products. That usually isn't the case
however as most of these taxes get passed due to immediate budget shortfalls.

If you have real budget problems then the only answers are to either cut
spending or tax something that is consumed by nearly everyone. However, taxing
something that effects everyone is much harder to get approved which is why
they go for the easy targets.

~~~
shpxnvz
_If you get what you say you want (i.e. reduced consumption) then your revenue
decreases which will force you to find another source of revenue._

The cynic in me would say that there's no real end to the list of behaviors
our government would like to engineer out of the population.

The benefit to them is two-fold; a possibly short-lived, but endlessly
repeatable, source of income, and a populace ever more willing to accept
government manipulation.

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FluidDjango
The title posted here distorts the meaning of the second sentence of original
paragraph, which says, "Higher prices are bad. Being told what to do is
worse." As the article points out, being taxed is _not_ same as being
forbidden.

Also, there seem to be _two_ agendas for the tax: 1)raising tax money and 2)
discouraging consumption of "empty calories." I can't tell from the story
whether legislators have prioritized between the two.

If it's the first... then bottled water (who virtue/worth is a whole other
discussion) could be taxed as well.

If it's the second... then aspartame (or plain water) ought to be favored over
sugar/corn_syrup by the tax. And that is rather like taxing cigarettes,
alcoholic beverages, etc.: essentially taxing risky (or costly-to-public-
welfare) behavior.

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henrikschroder
I can see how a ban can continually generate reactance, because you'll be
reminded of it every time, but a consumption tax will probably only see a smal
reactance at the start, and as soon as people forget about it, consumption
levels will drop accordingly.

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yoshiks
how about the tax for cigarettes?

~~~
chrisbennet
I think most of these "sin" taxes are taxes first with a justification added
later.

The cigarette tax may be morally justified as a way to reduce smoking and save
lives. According to the CDC smokers tend to live around 14 years less than non
smokers.

However, I've read that the justification that "smoking cost society money" is
not factually correct. Premature deaths due to smoking tend to occur earlier
and more rapidly and thus are cheaper than supporting someone into their old
age followed by a long hospital stay before death.

~~~
daten
I agree. If the government needs tax money for schools and is having a hard
time getting it from the taxpayers directly, it's easy to just pick an
emotional justification like "helping make society healthier" by "reducing"
smoking or soda consumption. The actual consumption doesn't go down but the
tax dollars do go up. The poor get poorer.

And what about the people that consume soda in moderation and in addition to
healthy food? I have soda every day. I also exercise every day and am in very
good shape. Not everyone who consumes soda is obese or diabetic. If you really
want to punish someone, why not do it in a way that doesn't affect everyone
else? If you want a "fat tax", why not do it based on the health of the
individual?

~~~
rsheridan6
That's not practical. The government would have to keep track of your health
and communicate it with every retailer.

~~~
yummyfajitas
They could also just give you a fitness test once a year at the IRS office and
tack your unhealthy choices onto income taxes.

For the middle class, this would be more optimal than taxing soda, since it
rewards the outputs rather than the inputs. For the poor (who mostly don't pay
taxes anyway), this wouldn't work so effectively.

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coned88
Your comments make me not want to be a HN member, I would think most of you
would have a better understanding of economics rather than the Keynesian crap
they teach in school.

anyway, most studies show being fat is far healthier than being skinny or
morbidly obese.

[http://www.nytimes.com/2007/11/07/health/07fat.html?ex=13520...](http://www.nytimes.com/2007/11/07/health/07fat.html?ex=1352091600&en=df140405014189b6&ei=5090&partner=rssuserland&emc=rss)

