I thought the anti-big-government tenor of this commercial meant it was only airing on Fox News, but recently heard reports of it being seen on CNN and MSNBC. Learning that this propaganda is widespread motivated me to address why it’s so totally misinformed, and make my best argument for why soda taxes are a great idea.
First, despite the seeming Tea-Party-esque rhetoric of the commercial, anyone should understand that most Republicans favor consumption-based taxes. What conservatives dislike are income-related taxes; spending taxes are the GOP’s solution. For example, proponents of the Republican-driven Fair Tax favor high sales taxes in exchange for low (or no) income tax.
Americans Against Food Taxes,” a front group for the soda industry.
Facing insanely, embarrassingly high rates of obesity (in 2009, 72 million people – three out of ten adults – were medically classified as “obese”), and rising health care costs associated with obesity, a few states have proposed placing high taxes on foods with little to no redeeming nutritional value and high sugar content. In 2008, New York Governor David Paterson suggested an 18% tax on sugary drinks, including sweetened juices with less than 70% juice. But Paterson was immediately met with backlash from the American Beverage Association, including protests by bottling plant employees, and the creation of aforementioned Americans Against Food Taxes. PepsiCo even threatened to move their corporate headquarters out of New York if Paterson persisted.
So in 2010, Patterson proposed a more modest tax: an excise tax of just one penny per ounce only on sodas, no juices at all. The Governor estimates this would raise $450 million for the city’s health care budget in its first year alone. But even his new proposal has been met with intense opposition. The beverage industry's newest argument is that the tax will disproportionately affect low-income and minority buyers, citing a study that low income consumers are more than twice as likely to drink soda.
A Yale professor named Kelly D. Brownell (along with every other scientist ever) debunked these beverage-industry-sponsored studies. Further, his studies pointed out a whole bunch of "market failures" that strongly support the soda tax, including the disparity of short-term gratification versus long-term harm, the misinformation propagated by the beverage industry, and the fact that the health system as a whole is forced to absorb the costs of soda-related obesity.
To combat these public health externalities, Brownell suggested exactly the same tax Paterson has proposed – a one-cent per ounce excise tax on sodas. A soda tax would not disproportionately disadvantage the poor, he argues, because the poor experience the brunt of obesity-related diseases. If anything, such a tax could benefit the poor by saving them money (a free beverage source – water – is readily available), and preventing disease.
According to the plethora of studies out there, even reducing caloric intake by a few percentage points a year could mean meaningful reductions in health care spending. Thus, if implemented, the soda tax would have a short term economic benefit of revenue, a long term economic benefit of decreasing health care costs, and a warm-and-fuzzy benefit of improving public welfare and reducing obesity. The only downside: to stay afloat, Pepsi is just going to have to buy more fast food chains.