Better Living Through Taxation Doesn't Work

Alcohol. Tobacco. Sugar. These things have been labeled "bad" and regulated at one time or another in our society. Prohibition went the farthest, securing a contitutional amendment to outlaw its target. Of course, this was later repealed. It turned out that Americans liked alchohol and found ways around the ban. Eventually the government capitulated and reversed a trend of lawlessness, bootlegging and black market "gin mills" that flooded the market once legal outlets were removed.

The tobacco war was fought another way: excessive taxation. By raising (and re-raising, and re-re-raising) the consumption tax on tobacco, we were assured that the goal was to reduce smoking and save lives. And better still, the taxes could be used for all sorts of wonderful things, like schools and hospitals. The problems started when the taxes began to work. Smoking was down. Then the woeful stories about tax shortfalls started. It turned out that maybe the public good wasn't the only (or even major) reason to tax smokers out of existence. Once the well began running dry, the taxes should have faded away -- after all, they were instituted to get people to stop smoking, right? -- instead there was (and still is) much handwringing over what to tax next to make up for all those inconsiderate people who either dropped dead or stopped smoking.

For some, sugar is the next bogeyman to be targeted. New York is leading the way with its soda tax. After all, obesity is a major problem in this country, right? And these fat people can't be expected to take care of themselves. They aren't going to get off the couch and stop drinking Mountain Dew and eating Twinkies just because they know they should. So they should be taxed a bit more. Sounds fair, right? I mean, it's not like people can just go around eating whatever they want. It turns out though that Americans like their soda like they like their alcohol: freely available. In this day and age, it's much easier to let your representatives in government know an idea is bad, and that appears to be what is happening on the sugar front in New York.

In Philadelphia, on the other hand, they're trying a different tactic: making the manufacturers and distributors pay the tax instead of the consumer. This way, they get to keep tax-averse constituent groups off their backs while raising revenue off those evil corporations. The problem is, this approach allows the cost of the tax to be dispersed across product lines, meaning the price of soda may not change at all. Wait -- I thought the purpose of taxing soda was to get people to drink less of it, and the extra revenue was just a nice little side benefit? Not to worry, say proponents: we'll just make the tax so high that that's not an option. What could go wrong?

Grocery stores and corner shops will be harder pressed to absorb the cost. With their already thin profit margins, they can ill afford to make a big product like soda a loss leader, Raju said.

Other than smaller operations possibly going out of business, nothing. It should come as no surprise that the Philadephia law's main proponent is it's mayor, a man named Nutter.

Meanwhile, back in New York, they are already preparing to fire the first shot in the newest front in the war to decide what you eat and drink: salt.

Section 1. The general business law is amended by adding a new section 2 399-bbb to read as follows: 3 S 399-BBB. PROHIBITION ON SALT; RESTAURANTS. 1. NO OWNER OR OPERATOR 4 OF A RESTAURANT IN THIS STATE SHALL USE SALT IN ANY FORM IN THE PREPARA- 5 TION OF ANY FOOD FOR CONSUMPTION BY CUSTOMERS OF SUCH RESTAURANT, 6 INCLUDING FOOD PREPARED TO BE CONSUMED ON THE PREMISES OF SUCH RESTAU- 7 RANT OR OFF OF SUCH PREMISES.

What could possibly go wrong with legislation like this? Using taxation to dictate behavior doesn't work. Oh, it might curb the behavior, as it has with smoking. But it simply feeds the addiction of every government that employs it: the addiction to tax revenue. If public health were really the goal, these sorts of taxes would disappear once the behavior is conquered. That doesn't happen. Remember when tobacco settlement money was supposed to be used only for smoking cessation initiatives? That went out the window as soon as this local budget or that one ran red. The assault on the tobacco industry stopped when governments couldn't get any more money out of them. Now Coca-Cola, Pepsico and the like are the new R.J. Reynolds. In New York anyway, it appears that Morton's is next.


NY Post and Philly.com links via The Conumerist
NY state assembly link via ConsumerClassActionMassTorts.com (via Overlawyered)

(Crossposted at Say Anything)