Whole Latte Trouble

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Seattle rolls toward its referendum on a dime tax on espresso drinks, oblivious to the fact that the premise of the tax is deeply flawed. It is clearly designed to function as a kind of luxury tax—"regular" coffee is exempt—on fancy drinks no one really needs.

Last time I had both eyes open wide enough to tell, coffee houses are no longer the redoubt of the leisure class. Those construction guys sure look like they need their redeyes, ditto the EMTs trying to wind down after a call with a decaf latte.

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  1. I thought the title was pretty funny …

  2. First of all, Liberty Lovers, this is a REFERENDUM on a tax for a specific purpose, your favorite method of governing.

    Secondly, your anti-tax mantra has left legitimate public services scratching for other ways to deliver the quality services you’re forever bitching about. Then, when they do something to address it you bitch about it some more.

  3. Those construction guys sure look like they need their redeyes

    Yeah, next thing they’ll be taxing crank!

  4. This tax seems to have no justification. Perhaps the program it’s supposed to fund has some justification, but they’re just finding an easy source of revenues. Wait, that sounds like nearly every other tax ever. Sorry about that.

  5. Rex,
    To be perfectly fair, you’d have to seperate spending bills by each party too. If the D’s wanna raise taxes to get universal heath care or some other canard, then only they get it because they’ll be paying for it with their higher taxes. Same goes with pork. If the red states want their pork, they’ll actually have to “gasp” pay the appropriate taxes. Maybe for once people will see the results of their policians’ actions and there will be greater accountibility. Too bad it’s such a freakin’ mess that this would never work.

    Snide sidenote: Anyone find it funny that the “red states” are the conservative ones? Back during the Cold War, no one would ever let their state be called a “red” state.

  6. Lefty: If you want those (cough cough) fantastic government services sooooo much, you pay them. I don’t have kids, so why should I have to pay for education of someone else’s snot-nosed brat (i.e. public schools)? My house isn’t on fire not has a crime been commited on my property? So why shouldn’t local fire protection and law enforement send me a bill if I need their services? Ditto street plowing and garbage collection. (I can get those via private contractors and at a lower cost to boot.)

    I can’t speak for the rest but this is one “liberty lover” who wants lower taxes and fewer services.

  7. Lefty,

    No one said they shouldn’t hold the referendum, but it was a stupid idea.

    If you honestly believe govt. has no money and therefore those at the bottom will suffer if we don’t just keep raising taxes, I have a bridge to sell you.

    My old high school, alas, HAD to cut the agriculture program because there just was no money and no one wanted their taxes raised. They then gave the supt. a raise for his handling of the crisis. It brought his salary to 125,000 a year. Not bad for a school in a rural area (student body 500 at best).

    Whatever.

  8. Lefty,

    Why is a referendum “our” favorite method of governing? Hell, others here have accused libertarians of being ANTI-democratic because they tend to support court decisions that overturn laws that violate basic rights. Truth is, libertarian per se is neutral on the various “methods” of governing, but it is clearly against taxation on the grounds that it is legalized theft. Now we could argue about that forever, so let’s not. But please make note that loving liberty has nothing to do with preferring referendums over any other “method” of governing.

  9. “First of all, Liberty Lovers, this is a REFERENDUM on a tax for a specific purpose, your favorite method of governing.”

    Actually, I believe in the concept of a constitutional republic, not direct democracy. It is too easy for a ‘mob’ to vote away the rights of individuals. Isn’t it all the lefty states that take up referendums (and then the lefties wine like spoiled brats when the public votes some way that lefties don’t approve)?

    “Secondly, your anti-tax mantra has left legitimate public services . . .”

    Preschool & daycare are legitimate public services? I’m sorry, but the parents should pay for that.

  10. Lefty,

    As a libertarian (lower case “l”) I generally oppose blanket taxes in favour of user-fees. I believe that the most economically efficient model for allocation of goods and services has individuals choosing and paying for exactly what they want.

    The only exception I’m willing to allow is in cases where the the inefficiency of collecting fees from millions of individuals would outweigh the efficiency of the payment model. In cases like roads, or national defence, a tax system that accurately allocates costs to the beneficiaries makes sense if it can be collected more efficiently than user fees. (A tax on gasoline to pay for road construction and maintenance allocates the costs to the road users in near perfect correlation to their usage.)

    I fail to see how allocating the costs of child services to the buyers of espresso drinks is in any way efficient.

  11. Rex:
    Competition between government options over a jurisdiction is an excellent idea! Unfortunately, the only significant real-world example I can think of is the overlay between Israel and the Palestinian Authority – not a good model to extend to the US.

    Mark S:
    Don’t go so extreme – it’s OK to pay police and fire departments for preparedness. Think of ongoing taxes as buying a call option, not the stock itself. Also, if you live in a hoity-toity neighborhood, you pay the school tax to maintain your property’s value.

  12. Russ:

    So you’d propose the tax should be on romantic restaurants, lingerie, and major blackouts?

  13. Not only will I vote NO! on this new lame tax scheme, especially since I have no kids and pay a fairly large property levy that recently increased “for the kids,” I also bought my own espresso maker and find my drinks to be much better and I don’t have this little glass jar with change seeking tips glaring at me. The obvious consequence of my actions is the loss of the $15 to $20 a week latte habit. If there is more Seattlites like myself, this should add up to close a couple more independents that stayed afloat when the 4 starbucks opened in my Neighborhood. (Note: Starbucks will undoubtedly be blamed for the indie’s closing.)

    They say, “its just a dime a drink, thats all,” and I say, “it was a good job for a college student, that was all.”

    For all the woes of liberal Seattle, at least we still don’t have a state income tax! (yet)

  14. I thought the reason the networks called the GOP states “red states” is because calling Dem-leaning states “red states” would be tantamount to calling them “commie states”, which, given their politics, would be too close for comfort. The networks would see that as possible commentary on the Dems fiscal policy. Likewise, Dems would never have the “yellow states” because that could be a critique of thier foriegn policy.

  15. amr,
    So are GOP leaning states called “red” states because they recieve more government services than they pay for. Or is it because of their cut taxes and spend strategy that leaves the Federal balance in the “red.”

  16. I never thought much of the color scheme. We could interpret it forever, about how calling the Dem states “red” would be seen as McCarthyism, or calling the GOP states red signifies red ink allegedly caused by tax cuts. But at the end of the day, the most rational colors for an electoral map in America are red, white, and blue. For all we know somebody rolled 1d6 (that’s a regular 6-sided die, for those who never played Dungeons and Dragons 😉 to choose among the 6 possible color schemes (with 2 parties and 3 colors there are 6 ways to divvy it up).

    But an explanation like chance would deny us the opportunity to go around bashing people unfairly. Can’t have that 😉

  17. Keith,

    “So you’d propose the tax should be on romantic restaurants, lingerie, and major blackouts?”

    No, user fees would be a good method for funding these programs. Privatization would be even better.

    But I like the “tax on blackouts” idea. East coast utilities should be paying their customers a 3-day cash-back rebate for the days they didn’t receive the goods.

  18. thoreau,
    Mindless bashing is half the fun of the Reason comment boards. In fact, the midless bashing is far more nuanced and intelligent than mindless bashing on right/left blogs. I think it was more of a coin toss, the media couldn’t go around calling some of the states “white states” without angering the NAACP.

    I was going to throw in a snarky comment about the white states, but I’ll let that one die.

  19. Nader would have been green (obviously).
    Perot and Buchanan were getting yellow (or was it “gold”)?

  20. Actually amr, I thinkBuchanan would’ve wanted white. Give Perot gold and have Ariana’s color change to whatever color is more popular on that particular day.

  21. Lefty-

    You’re wrong when you say referenda is the preferred governing method of libertarians. Personally, I don’t mind referenda because I trust We the People more than I trust the corrupt idiots holding office. However, many people fear direct democracy, apparently believing that the corrupt idiots in office will make better decisions than the electorate.

  22. thoreau,

    Umm, naw, I couldn’t live with Joe 6-pack making the decisions.

    Our problems that we have right now are because of Joe and his drinking buddies voting themselves a raise, essentially.

    We have a far left sometimes candidate here in AZ that is floating the idea of running a lottery to encourage people to vote. Do I need to expound on the problems that poses?

  23. Well, I think we should take it in turns to act as a sort of executive officer for the week. But all the decisions of that officer should have to be ratified at a biweekly meeting, by a simple majority in the case of purely internal affairs, and by a two-thirds majority in the case of all measures…

    Just kidding. When talking about “power to the people” it’s too tempting to incorporate that Monty Python reference.

    It would be easy to point to places where referenda brought about good or bad ends (good or bad from the perspective of liberty), and without comprehensive information it would be hard to argue whether referenda tend to protect liberty more often than they harm it. So I don’t know how to empirically justify my trust in Joe Six-Pack, but I don’t think anybody can empirically justify putting more trust in Joe Lieberman or Tom DeLay either. In the absence of comprehensive data I can only go with my gut, and I think your average American is a lot smarter and more honorable than your average politician.

  24. thoreau,

    I don’t know about that (and by the way I’m sure as hell not defending politicians). I think a lot of people tend to vote for the candidate who can promise them the most “goodies” as they say. That’s why you have politicians falling all over themselves to pander to the old folks when it comes to social security. Then they vote for the candidate who’ll promise them the most.

  25. thoreau,

    I don’t mean to malign the veracity or integrity of the average citizen, only their intelligence. Really.

    This will sound just awful of me and I won’t even respond to anyones’ arguments over it but I don’t think people should be able to vote if they’ve received any government funds in the last 12 months, excluding FHA and student loans.

    Outside of even that though, the point has already been made that people vote for whomever is going to do something for them. Increasing the directness of their grubby little hands does not sit well with me, but that’s only my opinion.

  26. Russ,

    The only exception I’m willing to allow is in cases where the the inefficiency of collecting fees from millions of individuals would outweigh the efficiency of the payment model. In cases like roads, or national defence, a tax system that accurately allocates costs to the beneficiaries makes sense if it can be collected more efficiently than user fees.

    What you’re describing is activities that would be performed on a much more decentralized level in a free market, because the transaction costs are too high for them to be performed on a centralized basis without the State initiating them from above.

    Rather than a “public goods” argument for State activity, I would take this as evidence that things SHOULD be done on a much more decentralized basis. If those using transportation services actually had to pay all the transaction costs without relying on imminent (sp?) domain or funding from general revenue, the costs of shipping and long-distance transportation would be higher, people would use less of it, and the economy would be much less centralized. Likewise if American business had to pay the costs of safeguarding its own investments overseas.

  27. As far as roads, if we wanted to have a funding mechanism that works similarly to what would obtain in a free market we’d raise the diesel tax and lower the gasoline tax (but still retain at least some gasoline tax). Here’s why:

    Say I owned a road. My understanding is that most of the damage to the road comes from big trucks, while normal cars do almost zero damage. That doesn’t mean I’d let cars go for free. The drivers evidently want to go somewhere, and they’d be willing to pay for the right to go there on my road. So I’d still charge them, and probably by the mile (the more time they spend on my road, the more traffic they create that potentially discourages others from using my road, so they have to pay me for that). Leaving aside the issue of different fuel efficiency in different cars, a gasoline tax more or less approximates what a private road owner would charge cars.

    Now, with only cars driving on my road, no big trucks or buses, I’d have to do very little in the way of repair work (correct me if I’m wrong). So the only way I’d think about letting big trucks on the road would be if they paid a lot of money per mile, and in proportion to their weight as well. Since (as I understand it) most big trucks use diesel, and since fuel consumption is proportional to miles driven and weight, a per-gallon diesel tax would be more or less equivalent to truckers paying fees to road owners.

    Now, I don’t have any numbers in front of me. I’d be curious to find out if the taxes collected on truck fuel are actually enough to pay for the interstate highway system. If so, I really don’t mind the diesel tax, since it is basically equivalent to the free market. Not exactly equivalent, but if it’s fairly close to what would happen in a free market then I’d make other matters a high priority and leave road privatization for the bottom of the list.

    As for gasoline taxes, if it turned out that gasoline taxes generated as much revenue as is spent on urban road maintenance, stoplights, snow plowing, and traffic cops, then I wouldn’t get too bent out of shape over gas taxes. I know, I know, it isn’t perfect. But the point is that it would be close enough to the market solution that other matters (e.g. property taxes) would be much higher on my list of priorities.

    Of course, without actual numbers in front of me this is all a bunch of what-if’s.

  28. The money quote:

    “It’s a dime. It’s nothing. It’s just a dime for kids.”

  29. Yes, it’s both nothing and it will raise millions of dollars. It’s a floor wax *and* a dessert topping.

    If it passes, I give it one year before they extend the tax to all pre-prepared coffee.

  30. How many itterations of this stupid latte tax are going to be submitted, discredited, and voted down? Ten? A hundred? Where does this fookin’ madness end?

    Tax DING DONGS and somebody is going to get KILLED I tell ya.

  31. This is honestly the stupidest tax I’ve ever heard of. And that is saying a lot, because I live in DC where every meal and alcoholic drink is taxed as “entertainment”.

    Since coffee is such a big business in seattle (starbucks, seattle’s best coffee, etc) I can’t beleive that “Big Coffee” can’t crush this thing as effortlessly as a Sumatra bean.

    Lawyer and economist types out there, help me out- is there anyway that Big Coffee could fight back? Maybe if they doubled their prices for city offices and cut prices for consumers by a dime, if the tax is passed? Could Starbuck’s threaten to reincorporate in Oregon or something? Of Course, I thought Microsoft should have moved to vancouver at the first sign of Insolence form the Justice Department. Too much Ayn Rand, I suppose.
    This is ludicrous, though!

  32. I hope the tax hungry bastards reap what they sow.

  33. This is not even close to the stupidity Seattle is capable of.

    One year after the start of the extra tax on restaurants to pay for the Mariner’s new stadium, justified by proponents by the extra revenue a stadium would bring to the city, everyone was wondering why so many restaurants were shutting down. One of the more popular explanations given was that evryone was staying in to watch the Mariner’s games on TV, since the Mariners were doing so well. This in spite of near sellouts for every game.

  34. What they need is a tax tax. Everytime some idiot comes with a “great” new tax that will “save the children” or “save us from ourselves”, they should have to pay a tax to even have it introduced for legislation or in a referendum. Then, everyone who votes yes for it (in the legislature or citizens in a referendum) can a tax-yes tax to show how truly and honestly they really want to help children/trees/addicts or whoever is supposed to benefit. After the money for these two taxes piles up, then things like this latte tax (if they actually get passed) may only be 5 cents rather than 10, and the people who passed and paid for it can pat themselves on the back twice as hard.

  35. I guess espresso drinks are easily attacked as fru-fru drinks of smarmy yuppies – a brutally easily target, really.

    As a former EMT (and current IT guy), let me tell you: if coffee is ever seriously taxed, we’ll have a catastrophic decline in health care (if not a total economic downturn).

  36. Serves ’em right! Uppity ‘espresso’ drinkers. Regular coffee just ain’t good enough for ya? You deserve what ya git!

    Its about time tha workin’ man got his …

  37. thoreau,

    Cars and trucks impose costs in different ways. The trucks cause most of the actual damage and maintenance costs, while cars cause the congestion. So maybe most of the revenue from cars could come from a rush-hour premium, while the bulk of overall revenue could come from a weight-based fee on trucks.

  38. Kevin-

    You make a good point. But price isn’t solely determined by costs. It’s also determined by demand. If people are willing to pay then the price will reflect that, regardless of how low the costs are.

    Anyway, I suspect that we could obtain a pricing scheme similar to (but not identical to) what would be obtained in a free market by adjusting fuel taxes. For that reason I think road privatization should be very low on any libertarian’s list of priorities. A free market price structure isn’t sufficient for a free market, but it doesn’t distort other sectors of the economy the way that a gov’t program would otherwise. The ideal is of course a completely free market. The runner-up is an intervention that doesn’t have any “spill-over” effects.

  39. thoreau,

    Yeah, but if market entry is free and the supply is elastic, the price will tend toward cost. Pricing to demand is possible in the short run, but in the long run it is only possible as a scarcity rent, as in the case of rare goods, inelastic supply, or an artificially created monopoly situation.

  40. I need crappuccino for my bung-hole!

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