Why the Soda Tax makes us angry; people do what they're forbidden

http://www.slate.com/id/2255127/pagenum/all/

by mootothemax • 16 years ago

27 40 16 years ago

patio11• 16 years ago

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• 16 years ago

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.

profgubler2• 16 years ago

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... 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.

araneae• 16 years ago

  Non-diet soda is almost as bad as cigarettes

Now that, my friend, is hyperbole.

You are 1.6 times more likely to become obese if you drink soda.

You are 10-20 times more likely to get lung cancer if you smoke cigarettes (CDC website)

I don't know anyone who would think an order of magnitude is "almost."

pbhjpbhj• 16 years ago

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

Actually diet soda (artificially sweetened and artificially flavoured carbonated water) is shown in studies to be unhealthy too:

"Although these observational data cannot establish causality, consumption of diet soda at least daily was associated with significantly greater risks of select incident metabolic syndrome components and type 2 diabetes." [http://care.diabetesjournals.org/content/32/4/688.abstract, "Diet Soda Intake and Risk of Incident Metabolic Syndrome and Type 2 Diabetes in the Multi-Ethnic Study of Atherosclerosis (MESA)"]

and more recently has been fingered as a cause of increased obesity.

Google "diet soda obesity".

Semiapies• 16 years ago

RTFA: it largely isn't expected to work.

See whether you can find any example in the wild of a "sin tax" that actually reduces consumption of what it targets.

corruption4• 16 years ago

Taxing activities in proportion to their chance of future burden on society makes sense to me (i.e. healthcare costs), as I believe individuals ultimately choose their lifestyle.

If it were up to me, taxes like this would be based on the same modelling that insurance policies are. People would choose what they lived like and the price would reflect the risk they are undertaking.

gyardley2• 16 years ago

To me, this sounds like a pretty good argument for not unnecessarily burdening society with costs to the individual - like healthcare. A future where the government evaluates all your behavior and taxes you accordingly seems a little dystopian, no?

yummyfajitas5• 16 years ago

That poor mother with two kids is disproportionately likely to be overweight or obese, and that $25/week of soda is only making things worse. Due to medicaid/SCHIP, her health care costs are the problem of all taxpayers.

It doesn't bother me to force her to internalize some of the costs she is inflicting on me.

Similarly, I don't mind taxing polluters in proportion to the pollution they emit.

(As of 2014, this argument applies to all Americans.)

goodside• 16 years ago

It doesn't follow that fat people incur more medical expense just because they're less healthy. Most healthcare expense is incurred while elderly, and the younger you are when you die the less it costs to treat you throughout your life. With regards to tax revenue, the ideal time for you to die is right after retirement, and the obese come much closer to approximating this than the thin.

ewanmcteagle• 16 years ago

This is the problem with this form of healthcare. First we insist on socializing these costs then the socialization of costs is used as justification for meddling in the details of other people's lives. After all, as you said, now it's inflicted on you. Since respecting individuality and autonomy is only important to a tiny percentage of the population I don't see it getting any better either.

anamax• 16 years ago

> It doesn't bother me to force her to internalize some of the costs she is inflicting on me.

She's not inflicting those costs on you. You're offering to pay. That offer doesn't obligate her to make things cheap for you.

If you don't like what it costs for you to feel good about yourself, that's your problem.

khafra3• 16 years ago

I dislike regressive taxes as much as anyone; but the point of this tax is to encourage that poor mother not to buy $25 of soda a week. I grew up in a middle-class household that could've easily afforded a 24-pack of Coca-Cola every day, but we only had soda as a rare treat: a rootbeer float once a month or so. If we were thirsty other times we'd go for the pitcher of water in the refrigerator.

I don't want to get all "uphill both ways" with this, because I really don't feel that I was deprived--I just think a tiny step toward a healthy lifestyle like that shouldn't be reserved only for the wealthy.

yoshiks• 16 years ago

how about the tax for cigarettes?

chrisbennet• 16 years ago

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• 16 years ago

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?

henrikschroder• 16 years ago

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.

FluidDjango• 16 years ago

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.

bballant• 16 years ago

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.

akmiller• 16 years ago

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• 16 years ago

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.

coned88• 16 years ago

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...

Why the Soda Tax makes us angry; people do what they're forbidden

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