A Federal Soft Drink Tax?


The Wall Street Journal reports that "Senate leaders are considering new federal taxes on soda and other sugary drinks to help pay for an overhaul of the nation's health-care system." One proposal is a tax of three cents per 12-ounce serving (or about 17 cents for a two-liter bottle), which the Congressional Budget Office estimates would raise $24 billion over the next four years. In addition to bringing in revenue, the Journal says, proponents of the soda tax want to "lower consumption, reduce health problems, and save medical costs." Yet a tax of this size is not likely to have a noticeable impact on sugary soft drink consumption, let alone overall caloric intake, and therefore will not measurably affect "health problems." And if reducing medical spending is the goal, we'd better hope the tax doesn't work as advertised, since fat people have lower lifetime health care costs than thin people do.