The next big payday for the statist in government around the country is a tax on sugary drinks, meaning the price of my Mountain Dew is going up. Supposedly, this will make me less likely to buy the delicious emerald nectar that fuels bloggers and MMORPG players around the world. And that will make me healthier, lowering health care costs due to obesity.
It’s a win-win for America, right?
Nanny statism is rarely a win for anyone, as it limits my right to choose, regardless of whether it is harmful to me or not. But let’s crunch the numbers and see what happens fiscally.
In May, the Wall Street Journal noted estimates by the Congressional Budget Office which estimated a plunder of $24 billion over four years with just a three cent increase in the cost of a can of soda and other sugary drinks.
That is a lot of loot.
The L.A. Times says it could bridge the budget gap on the state level, generating $10 billion via a seven cent tax on 12 ounce cans.
Here’s a strange idea, but let’s give it a day in court. If the goal is bridging budget gaps, how about spending less?
For example, the federal government subsidizes corn, which is used to create high fructose corn syrup. Pure sugar is reserved for “premium sodas,” like Jones Soda. The average soda uses high fructose corn syrup. Katherine Mangu-Ward found that if you didn’t subsidize corn, you wouldn’t need the tax.
Subsidy packages to corn growers have been sweet in recent years, with an average of about $5 billion annually since 1995, and a bumper crop of cash in 2005 clocking in at about $9.4 billion. Many of the acres of corn grown in the United States wouldn't be profitable if it weren't for federal subsidies (as chronicled in the excellent documentary King Corn), yet those billions keep the cheap corn piling up around our waists.
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The application of a little basic math reveals an interesting coincidence: The expected revenue from a soda tax and the expected subsidy payments to corn farmers come to almost the same amount--somewhere between $5 billion and $6 billion a year.
Realistically, we know this isn’t going to happen. It isn’t because the legislators are so concerned about the family farmer. They don’t collect the bulk of the subsidies. It’s just easier to pass a new tax than it is to end an old handout.
So we find ourselves looking at a sin tax as the latest solution to overspending. Three cents a can isn’t a game changer. People will still continue to buy soda, which will encourage the legislators to increase the tax.
It started this way for cigarettes. In 1921, Iowa was the first state to tax cigarettes. By 1940, 40 states had followed Iowa’s lead with taxes ranging from one cent to eight cents. Come 1969, every state was taxing cigarettes.
Today, the black market is making a killing on cigarettes. In New York City, state and local cigarette taxes have inflated the price of a pack to over $9. Those sin taxes have created a thriving black market and have resulted in billions of dollars being funneled to elements even more unsavory then the government.
It’s ridiculous to think that someday you’ll be buying Mountain Dew out of the back of some guy’s car, funding the criminal underworld, because taxes have the cost of a soda at over $9 a can. But that is what happens when government attempts to regulate behavior. It doesn’t stop the behavior. It simply moves it underground.
And despite what the non-scientific Center for Science in the Public Interest says, a tax on soda will not impact the obesity problem in America. Katherine Mangu-Ward, writing at Reason.com, notes, “soda consumption per capita has remained steady over the past two decades as obesity numbers have continued to rise. Weight gain is a function of calories in minus calories out. A food calorie is 4.2 kilojoules of energy, whether it comes from a bottle of orange juice, a latte or an ice-cold Coke.”
Budget problems can be solved by looking at your money going out and then deciding what you can do without, not deciding what you want to spend and then plundering the people for the money required. In March, Congress passed a $410 million bill with $8 billion in earmarks. Get rid of those earmarks and you get rid of the soda tax.
Plus, you don’t turn all the World of Warcraft shut-ins into back alley soda heads, looking for their next six pack of Mountain Dew. Think of the kids.
Duane Lester's Bio
Duane Lester is a former Navy journalist turned blogger and podcaster. He also writes at All American Blogger and hosts All American Radio on RFC Radio . You can follow him on Twitter at @bodhi1 .
Posted
10-05-2009 12:01 AM
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