How Soda Taxes Would Encourage Bad Budgeting


Slate's Matt Yglesias argues that if policymakers want to discourage soda consumption, they ought to pursue higher taxes on soda rather than arbitrary and essentially performative bans on lans on large portions in certain cases:

It tells us that any plausble soda tax should be seen primarily as a tax policy matter and only very secondarily as a public health measure. The habitual soda drinkers who make up the bulk of the soda-buying population will mostly just pay up. You'll raise a lot of revenue in an economically efficient way, and only very mildly deter soda consumption. What's more, the people most likely to be deterred are the people with a weak attachment to soda drinking. Those are people who either aren't negatively impacted by the health consequences of soda drinking (because they don't drink much soda) or who won't be positively benefitted by reduced soda consumption because they'll gladly substitute to something like (like coffee drinks with tons of sugar in them). 

The more interesting question is the long-term one. I'll gladly pay $3 for my Diet Pepsi because I'm already a diet soda junkie. But if all Diet Pepsies everywhere were this expensive, would I have taken it up in the first place? Very possibly not.

I don't support special taxes for soda or any other beverages, but it's almost certainly the case that a straightforward retail tax on sugary drinks would be more effective at reducing soda consumption than New York Mayor Michael Bloomberg's quixotic portion-size rule: If you tax something, you get less of it. The larger the tax, the bigger the behavioral effect.

The problem with these sorts of taxes that Yglesias doesn't address is that they facilitate irresponsible budgeting. Politicians don't slap taxes on popular activities only to let the new revenues collect interest somewhere; they use that money to pay for new programs. But that means programs end up relying on funding from 1) an activity that public officials say they want to discourage and 2) a declining revenue stream as behavior slowly shifts away from the taxed activity.

We've seen this time and time again with smoking taxes, which are often used to fund public health initiatives, including Medicaid. Initial revenue estimates prove too optimistic, and then state or local governments are left with expensive programs and declining revenue streams, as well as an awkward need for more people to smoke in order to pay for health programs. 

NEXT: Kurt Loder on Prometheus

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  1. If you ban it, but only put administrative fines on the ban, isn’t that just the same thing as a high tax?

    1. Hasn’t Obamacare resolved this conflict?

      It’s neither. Or both.

      Shorter Answer: Yes.

  2. bebsi, is that Ukrainian?

    1. Don’t be silly. It’s obviously isqeq, which must be Arabic.

      1. It’s Bizarro-world Yglesias, who’s intelligent and rational.

    2. and essentially performative bans on lans on large portions in certain cases:

      It tells us that any plausble soda tax should be seen primarily as a tax policy matter and only very secondarily as a public health measure. The habitual

      Do you guys even bother to spell check the articles any moar?

  3. I live in MD. When the state imposed the recently-enacted tobacco tax, we just started driving to southern PA.

    More than that, I can imagine a black market evolving for anything that’s banned. NY’s already struggling with cigs from, say, NC, being sold at a profit in NY. How can thi possibly work?

    1. I live in MD too, don’t smoke, but when I worked in a warehouse during college there was a “smokers pool” that pooled money and then they would take turns driving to West Virginia for cigarettes (of course, they probably stopped in Charlestown too).

      Even the little GED warehouse worker figured out how to get around the tax. Cute huh!?

      1. Even the little GED warehouse worker figured out how to get around the tax.

        Public Education Works! Wait, what?

    2. I live in MO, which has some of the lowest cigarette taxes in the nation (for now). There are tobacco shops aplenty just across the bridges to Illinois which – shock of shocks! – has sky-high taxes on same. Smuggling is a big “problem” as far as Illinois is concerned. As far as I’m concerned, Illinois can pound sand (and I’m not a smoker).

      1. Smuggling is a way of life on the east coast. Lots of people pay for their gas and tolls on trips to NYC from Virginia by taking a few cartons in the trunk and engaging a little arbitrage. All you need is a friends or family in Jersey or New York who smoke.

        1. looking back, i could have covered a lot of expenses as an undergrad had i just packed the car with cigarettes for the VA to NY trip.

          1. It is shockingly easy to do. (I am told ;-))

        2. Yep. I never go north without cigarettes. I usually set up with 15 or so friends and get their orders, then pick up a few extras. I sell them for 7.50 a pack, which undercuts the NJ price by about a dollar, and the NY price by like four dollars. That’s a 2 dollar profit per pack.

          I take a special pleasure in undermining Bloomberg’s jackbooted thugs.

          1. Are you fucking serious? I haven’t been a smoker in a long while (hrm, probably 10 years now) but are packs of cigarettes seriously that expensive now? Holy fuck!

      2. Relatives of mine live on the south side of Chicago, but about 2 miles from Hammond, Indiana.

        Guess what state they buy their gas in?

        1. My old neck of the woods. The residents of “the region” buy their gas and smokes in Indiana, and their alcohol in Illinois.

  4. How about we stop with all of the social engineering already?

    1. One more law will solve it all.

      1. We just need the right law.

    2. But someone somewhere is having more fun than me…

    3. Just as soon as those cattle, the electorate, start living the way their betters have laid out for them.

  5. Sin taxes blow.

    Im looking at $9.50 per barrel. $7 federal and $5 state, with a $2.50 state credit for brewed in state. And that isnt including the 11% distributor tax. I will let the distributors whine about that.

    KY is a relatively low alcohol tax state. So when I expand to other states, that rate will go up. And if I get above 60k barrels (the size of Victory or Flying Dog), that federal rate jumps to $18 starting with bbl #60,001.

    1. This whole idea that the government can ban, tax, or restrict things like this to death is ridiculous.

      1. Makes me feel less bad about ABI. They are paying about $1.8B in federal excise taxes each year.

        They dont even get the $7 rate for the first 60k barrels.

        Hmmm…numbers for 2011:

        98500000 * 18 = $1.773B

        Thanks Bud!

    2. $5 state, with a $2.50 state credit for brewed in state.

      So, one engineering tax because alcohol is bad, then one engineering credit because instate alcohol jobs are good.


    3. Taxes blow. Almost nothing the government spends tax money on I actually want done in the first place, and those things that I do want, could be pretty trivially paid for with subscriptions and usage fees.

  6. Dont you just love those bought and paid for politicians? WOw.

    1. Bring back TiggyFooo!

  7. Wow is that guy in the picture a douche bag. I hope he is retarded or something because I would hate to be normal and still look like that.

  8. Sin taxes on DIET soda?

    Sin taxes on regular soda at least logically follow from the Nanny/Authoritarian mindset. But is Yglesias really rolling over for taxes on flavored water and aspertame?

    What a bootlicker.

    1. You’re gonna absolutely love the tax they end up putting on bottled water.

      Because…uhhhh…oh, because of the trash the bottles produce, That’s The Ticket!

  9. I hate Yglesias think more than Blooomberg think. Hell, why don’t we just identify all things that lots of people enjoy and instill enjoyment taxes on those things. In Yglesias think, people will be happy to pay enjoyment taxes because they enjoy the product!

    1. But then we could tax Yglesias for the enjoyment he gets out of other people being taxed.

      1. We could tax him for the enjoyment he gets out of his false belief in his intellectual superiority. Debt crisis solved.

  10. Short form:
    Taxes encourage bad budgeting.

  11. Matt Yglesisas just loves the idea of raising the costs of life for poor people.

    Progressives, they be an ideological mess.

  12. These assholes that think its ok to legislate behavior are coming from somewhere. Can we find this hell on earth and bury it in concrete after salting the dirt?

    1. Just behavior they don’t like. Ask them about restricting a women’s right to abort a child because it is a girl sometime. You have a right to abort you child, but do not have a right to order a 44 ounce fountain drink.

      Yeah, they are that fucked up.

    2. They are coming from everywhere. We are the weirdos, sadly.

  13. I’m more concerned with fat children. To me, letting your child drink enough soda to become fat and even diabetic is child abuse. Adults can fuck themselves up if they want to, but I think packaging should be much clearer on how much sugar you are putting into yourself.

    1. Of course it is not the soda that makes them fat. I drank Coke by the gallons as a kid. I was never fat. Of course I got out and did things and didn’t spend my life in a hermetically sealed safety zone.

      By your standards, parents who don’t let their kids play outside unattended are committing child abuse. And you know what, you may be right.

      1. Yglesias’ eventually point will be preventing fat people from reproducing. Eugenics all over again.

        America doesn’t have an obesity problem, it has a vanity problem.

        1. But Yglesias is a fat hipster toad. I bet he couldn’t do five pushups or run a quarter mile. Can we sterilize him first?

        2. Yep. Said it before: “Three generations of fatties is enough”


      2. I’m nearly convinced that the lack of unsupervised, outdoor play is pretty much what is wrong with kids these days.

        1. Yeah, it’s definitely a lack of getting out and moving around all day long. Poor diet for sure as well, but you can eat poorly and still be in shape if you’re burning calories most of the day.

    2. I think packaging should be much clearer on how much sugar you are putting into yourself.

      150 calories.
      41 grams of sugar.

      It’s like F-ing Greek, isn’t it?

      1. But that is not fair. You have a functioning brain.

        1. I solemnly swear to you, one and all, that this is a genuine quote, re: Bloomberg… and I’m even providing the link, to prove it:

          “The truth is that there’s nothing inherently wrong with paternalistic government or, in the harsher, feminized shorthand of its detractors, the ‘nanny state.'”

          Fuck. Me.

          1. That is not even the best part Ben. Get this

            What about when the nanny state instructs us to behave in accordance with its views of morality? I disagree with conservative aspirations to install the nanny state in my bedroom, but I wouldn’t necessarily begrudge the state its power to play moral cop elsewhere. I approve of the government prohibition against the selling of organs, and I would never want the government to stop discouraging illicit drug use and prostitution (though I might quibble with its methods). These prohibitions all constitute the government helping to define the nation’s collective values, which is entirely legitimate.

            Words fail. As long as they don’t control who you fuck, it is perfectly okay for the government to control every other aspect of your life.

            Is Noah just a totalitarian who happens to be a sex obsessed pervert who thinks that not even God government can interfere with his perversions?

            1. It least he is honest about his intentions.

              But what a fuckwad.

              1. Wait a second on that, I rescind that.

                He isnt even honest with himself.

                I disagree with conservative aspirations to install the nanny state in my bedroom

                I would never want the government to stop discouraging…prostitution

                So, no nanny state in the bedroom UNLESS money is changing hands. Then it can be in the bedroom too.

            2. Yeah, that’s nuts. Complete blindness to the fact that his political opponents will one day have the powers he wants government to have.

          2. I read that article and nearly stroked out right there.

            Nanny Statists are bad for health! We should ban them reduce them to 16 ounce portions.

    3. It is clear. What’s not obvious is why there’s a need to ban Coca Cola and not Mott’s Apple Juice. Comparing 8-oz servings of each:

      Coke—- 100 cal —- 27g sugar
      AJ—— 120 cal —- 28g sugar
      (link URLs too long to paste here but Google “mott’s apple juice nutrition label” and the first result shows the labels of each).

      So if it’s not really about the sugar, what’s the deal?

      No – don’t answer that…

      1. So if it’s not really about the sugar, what’s the deal?

        Politicians know that consumers *think* soda is teh corporate-evil that makes everybody fat, so they put on their white suit of armor and go out pretending to slay dragons, saving the children, doing good deeds, getting re-elected…

        1. consumers *think* soda is teh corporate-evil

          While Mott’s is a simple Mom’n’Pop operation trying to make its way in a land of corporate giants….

          Eventually, the company was acquired by American Brands (formerly American Tobacco) and became a division of that conglomerate.

          Oh, whoops.

  14. Don’t large portions use less packaging than multiple packages of smaller portions? Why do Bloomberg et al want to exacerbate global warming????

  15. Is it possible to tax smugness? I am thinking Yglesias is among the very under taxed 1% if we can.

  16. Both common sense, academic, scientific, social-sciences research have all pointed out repeatedly that Soda is not a significant cause of obesity, particularly in the context of *all* packaged beverages, which are in essence functionally the same = Water, sweetener, flavoring. There is a significant amount of public self-delusion and mythos regarding the particular dangers of one kind of sweetener (HFCS) versus others, as well as the particular dangers of Soda versus, say, iced teas… many of which (notably the #1 brand – Arizona, made by by Ferrolito Vultaggio;, *based in NYC*) have essentially the same sugar/sweetener per oz as full-sugar colas…AND are predominantly sold in 24oz bottles cans.

    Coke, late to the game in defending itself and its category from this long-building bias against soft drinks, finally started a campaign to point out a fairly convincing fact (which nevertheless it hates to admit) = the most rapid increase in American obesity (the 90s-2000s) occurred during a period in time when overall rates and quantity of soda consumption has been in *steady decline*. Soda consumption *peaked* in the early 1990s. If soda was such a mortal threat to health, how is it that the 2-3 decades leading up to the 1990s, where Soda was virtually the only significant soft drink option, we had no particular ‘epidemic’ of obesity?

    1. If soda was such a mortal threat to health, how is it that the 2-3 decades leading up to the 1990s, where Soda was virtually the only significant soft drink option, we had no particular ‘epidemic’ of obesity?

      Obesity can’t fast, and it took that long to catch up. You fattist!

      1. *run fast

  17. “I’m already a diet soda junkie.”

    That’s like having a major addiction to unflavored rice cakes.

    1. He’s saying, in so many words, “I have no taste whatsoever”?

      I more or less abandoned soda altogether sometime in my 20s, but on the rare occasion there are few other choices (DEAR LORD, WHEN WILL WE GET BEER IN MOVIE THEATERS??), or it just goes well with a burger… shit man, go for the full bore hardcore HFCS goodness. Diet soda tastes like shit.


        1. Commercialized Fusion
        2. Miniturized Fusion
        3. Iron Man suits for everyone
        4. Beer in Movie theaters

        1. 5. Profit!

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