Free Markets, Free People

soda tax

Trying to justify taxing “caloric sweetened beverages”

Or as you know them, soda’s, energy and sports drinks and fruit juices.

The USDA has gotten in the act – all in the name of science and health, of course – and has offered it’s opinion on the matter.  Linked is the report summary.  Here is what they found:

• A tax-induced 20-percent increase in the price of caloric sweetened beverages could reduce net calorie intake from all beverages by 37 calories per day for the average adult. The effects for children were estimated to be larger—an average reduction of 43 calories per day.

• By assuming that 1 pound of body fat has about 3,500 calories, and assuming all else remains equal, the daily calorie reductions would translate into an average reduction of 3.8 pounds over a year for adults and 4.5 pounds over a year for children.

• The weight loss induced by the tax could reduce the overweight prevalence among adults from 66.9 to 62.4 percent and the prevalence of obesity from 33.4 to 30.4 percent. For children, the at-risk-of-overweight prevalence would decline from 32.2 to 27.0 percent and the overweight prevalence would decline from 16.6 to 13.7 percent.

Let me summarize – a 20% tax would reduce consumption of these beverages enough to take “37 calories a day” out of your diet.  That resulting net loss of 37 calories would average 3.8 pounds for year and take the overweight population from 66.9% to 62.7%.

Really?  37 calories a day – the amount of calories you burn getting off your fat behind and walking to the fridge for another soda?  Overweight people normally ingest more calories a day than they burn.  And that caloric intake is usually well over 2,000 calories a day.  37 calories?  That’s a third of a granola bar, for heaven sake.

This is science?

Oh, wait – a couple of qualifiers:

1. A large group of individuals are overweight or obese by only a few pounds, and a small reduction in calorie intake could change their weight classification; and

2. Many overweight and obese Americans consume large amounts of caloric sweetened beverages. For example, 10.6 percent of overweight adults consumed more than 450 calories per day from caloric sweetened beverages— nearly three times the average amount of 152 calories consumed by adults.

And, of course, it is the job of government to help tax these people into a new weight classification?  Well of course it is – Congress just gave themselves the power to make it their business.

Of course this 37 calorie drop a day assumes that a) overweight people won’t change a thing other than dropping the consumption of “caloric sweetened beverages”, b) won’t attempt to fulfill their desire for sugary food with something else or c) won’t grudgingly pay the tax and continue their consumption habits .   The further assumption, of course, is they’ll lose the weight as a result of the negative incentive provided by a 20% tax.

Not only are these people marginal scientists, they seem to know very little about human nature.  On top of that, they certainly don’t seem to understand the political blowback something like this is likely to have. 

But, just the fact that the USDA is dabbling in studies about taxing sugary drinks should tell you all you need to know about the continued intrusive depths to which government now plans to go to regulate everything in your life. 

Freedom means the freedom to succeed and to fail.  It means as long as  you aren’t violating or intruding on someone else’s rights, you can pretty much do whatever you want – to include get fat on sugary drinks.  What it doesn’t mean is some outside agency deciding what is or isn’t good or healthy for you and deciding to tax you into the behavior it deems proper.

But that’s precisely what this “study” is all about.

Freedom is becoming a rare commodity in this land, and we need to understand that and fight against any and all attempted intrusions no matter how trivial or seemingly well intentioned.  Allowing the incremental encroachment of government in all areas of our lives is the sure way to kill freedom and put us well on the road to serfdom.


The sin tax gambit

We’ve talked, at various times, about sin taxes. Recently, however, the focus has been on taxing sodas. Coke. Pepsi. Mountain Dew. Gatorade. Red Bull. Of course, as with all “sin taxes” the supposed reason for them is to save you. That’s what the cigarette sin tax was about (while the government continued to pay tobacco subsidies).

So let’s review the official reason for saving you from yourself:

Of course, policymakers never sell “sin taxes” as a revenue generator. It’s all about public health. This time around, they preach to us about America’s “obesity epidemic,” a largely self-induced affliction that at least one billion of the world’s population probably wouldn’t mind having.

The causes of obesity are the same as they’ve always been—excessive caloric intake, lack of exercise, and genetics—but politicians say they have a solution to this age old problem that is as easy as, and healthier than, pie. Save the sinner: tax the sin. To summarize the logic of a recent report in the New England Journal of Medicine—making soda more expensive will force people to consume less soda and lose more weight, all while raising much needed tax revenue.

Have you ever heard such a tax presented as “hey, we’re in debt and need the revenue?” Of course not – “obesity” is the new crusade and taxing behavior we don’t want is the way to “prevent it”. But as Rob Raffety points out, soda – sugary drinks – are simply one of a veritable universe bad caloric decisions one can make. And, even if those are taxed to the heavens, unless the government can require exercise and reverse genetics, it’s approach and focus on one tiny part of the problem really doesn’t solve anything – does it?


More to the point, the very thing that makes sin taxes, or the soda tax, so successful at generating revenue is that they rarely achieve the desired health effects for which they are ostensibly adopted. This is because the degree to which people change their behavior in response to a tax varies widely depending on how high the tax is and how sensitive consumers are to the change in price. Consider Arkansas and West Virginia – both states levy taxes on soda; both rank very poorly in obesity, 10th and 3rd respectively. Are the residents of these states measurably better off—any less obese—because they pay higher prices for pop?

It’s practically impossible to project any positive health effects of the soda tax due to the plethora of high-calorie substitute beverages available to consumers. As noted in a recent report by my colleague at the Mercatus Center, Dr. Richard Williams, someone who swaps a Pepsi for an apple juice, milk or lemonade is actually consuming more calories than before. Exactly how beneficial to one’s waistline is a policy that potentially shifts consumption to from a can of soda to a beverage that has more calories?

Said another way, the only possible way for there to be any health benefits derived from this sort of a tax is to make the tax a broad based one that covers all “unhealthy” high caloric food or drink and their alternatives to the point they’re too expensive to buy. And again, that doesn’t address the questions of exercise or genetics.

So what is a tax on soda? Simply another in a long line of revenue generators presented to the gullible among us as an attempt to make us more healthy. Taxing Ding Dongs and potato chips wouldn’t be far behind.  But there’s a basic inescapable truth to this sort of a tax that our government overseers would prefer we just ignore:

After all, if the tax worked, people would stop drinking soda and it wouldn’t raise any money at all. In other words, the notion that the true purpose of the soda tax is to make people healthier is all wet.

For those in doubt, revisit the tax on cigarettes. And besides – it’s really none of the government’s business (or it wasn’t until HCR passed, huh?).

[HT: Eliza]