“America needs a national sugar tax”

Indeed we do need a sugar tax and the sometimes fine folks at the Washington Post’s editorial page deserve credit for saying so.  For over 25 years, I’ve been reading the Washington Post.  Despite the paper’s somewhat liberal reputation, the opinion page editors have been a moderate crew especially when it comes to economics (and military adventurism).  They are all too willing to accept transparently self-serving corporatist arguments.

My sense is that current opinion page editor Fred Hiatt really believes them.  I don’t think he’s a cynic who merely channels the libertarian nostrums endorsed by the paper’s new owner – Amazon founder and well-known libertarian Jeff Bezos.  It appears that he actually swallows the free market snake oil he peddles. After all, Hiatt published Third Way/No Labels/DLC propaganda long before Bezos came on the scene.

Moreover, to be fair, there are often times when utilizing the market – or more properly pricing mechanisms –  is the most efficient way to solve social problems.  I call this approach taxing the bads not the goods.  Perhaps the most obvious example is anthropogenic global warming which results entirely from human consumption of fossil fuels .  While various solutions have been proposed, by far the best relies on heavy taxes to the price of gasoline, natural gas, and coal very significantly relative to all known and unknown alternatives.

When you raise the price of goods and services with a sales tax, you reduce demand for them.  There may not be any exceptions to this rule.  The demand for cigarettes and alcohol was thought to be inelastic, i.e., significant price hikes would have little effect on demand.  But economists have noted that demand drops for even the most addictive substances, including tobacco, when the relative cost of consuming them rises.

Given the iron-clad law of supply and demand, it is extremely disappointing that our public servants make so little use of it.  Preferring far less effective and much more costly solutions like prohibition, politicians have brought us a war on drugs that has done little, if anything, to curb our demand for marijuana, cocaine, and heroin.  Former New York City Mayor Bloomberg employed this strategy when he unsuccessfully tried to ban locally owned shops from selling super-size soft drinks.

Using taxes or tariffs to raise the cost of bads, including sugary comestibles, fossil fuels, imported goods and services, and speculative Wall Street transactions will make America a better place for nearly all of us.    The only losers will be those who profit from making us fat, burning up our planet, off-shoring jobs, and risking and sometimes tanking our economy.  Because a gas tax will truly harm poor, working, and middle-class Americans, the revenues must be rebated to the public with each American receiving an equal share of the total collected.

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25 Responses to “America needs a national sugar tax”

  1. Shade says:

    Since I need not consider political foolhardiness as Bernie Sanders really should, I’m going to borrow a phrase Bernie inadvisably used & say “To hell with the sugar and corn-syrup industry”. LOL. I don’t have problems with slowly increasing taxes on sugar and corn syrup and other non-nutritional and unhealthy foods – nobody needs the stuff to drive to work, heat & power their home, etc., and the health issues this stuff causes raises all of our medical expenses.

    I do have problems with your statement that economists tell us that demand drops even for addictive substances when you raise the price. I agree this works within certain limits, but push the envelope too far (as we have with our “war on drugs”) and you run into undesirable consequences.

    On the subject of a Draconian rise in the price of gasoline, I have an example of what can go wrong from my own family history. During WWII, a time during which there was gasoline rationing, my father bought a car from a friend who had customized the vehicle to run on either gasoline or cleaning solvent (a hydrocarbon that wasn’t rationed). The way this worked was the car would initially be started on gasoline, and then after warmup, the operator would throw a cutover switch and the engine would then run on cleaning solvent. Just before shutdown you would switch back to gasoline to ensure the engine would restart. While admittedly running a modern engine 100% on another fuel is now less likely to happen (given that modern engine operating parameters are so tight they must be controlled by a computer), lesser mixes that would force the emissions system into “limp mode” would be possible to run. More importantly my example goes to show the law of unintended consequences when you push any policy to the extreme. What I would fully expect if gasoline prices were raised by $10/gal (even given monthly rebates) would be that gasoline thefts would skyrocket. I hope nobody thinks that the locking gas cap or cover you have does anything but force a thief to damage your car to get to the gasoline.

    Continued below

    • Jeff Linder says:

      I would like to know where the government gets authority to control the diet of its citizens? Where does it end?

    • Shade says:

      I agree there should be high taxes for high earners and that “sin taxes” have their place, but don’t overtax gasoline or any other product so much that it becomes necessary to provide everybody an “equal” monthly rebate in the name of fairness and/or to keep people’s life affordable. What you can’t seem to understand or lack the compassion to care is that for many such a plan would create horrific hardships – most of which would happen to those who for some reason need to use more gasoline than average and/or that have limited financial resources. Any such system will never be fair, and any effort to improve fairness will only increase administrative overhead and would likely be just as unfair to yet another group of people. The result would be the government perpetually chasing its tail in the name of fairness. The idea is just an unnecessary and counter-productive proposal.

      • Shade says:

        I also have problems with the government attempting to perform wealth redistribution in the form of direct monthly rebates (except in the form of welfare at the margins of survival).

        • Shade says:

          Do you realize how many people are unbanked or that can’t even manage a debit card?

          • Shade says:

            Do you understand that many pay usury fees just to cash their paychecks and worse, how many take p-a y-d-a-y loans? Do you understand that poor, uneducated, mentally challenged, and transient people experience a very significant percentage of theft and fraud re their checks and debit cards?

            In summary, I just cannot in principle support a Draconian tax that unnecessarily cycles money that poor people can’t spare through an unnecessarily bureaucratic system with unnecessary and inefficient overhead expenses. And no, starting the gas rebate a month in advance of the tax doesn’t work either. If an advance rebate would solve the issue of how such a tax affects poor people, then the government could solve the issue of poverty by cutting a one-time check to each poor person for $1000. Of course we all know that wouldn’t work.

      • halginsberg says:

        Actually, giving poor people money has been shown to work and may be the best way to alleviate poverty and homelessness. Otherwise, we’ve been over these arguments many times. I don’t find your allegations that I’m insufficiently sensitive to the plight of poor and working people persuasive or that a fossil fuels tax would make life worse for them. In fact, I am very confident that so long as the collections are returned pro rata to every American we would see a great reduction in poverty. To the extent that a small number of poor, working and middle-class people would lose out, the government must address their specific problems

        • Jeff Linder says:

          Shown to work? The US has spent billions and billions and billions since Johnson’s war on Poverty. Guess what? The poverty rate hasn’t changed much.

        • After a BLM activist did disrupt Trump’s event & his supporters did knock the activist to the ground & beat him, Trump later said “Maybe he should have been roughed up because it was absolutely disgusting what he says:

          You’ve led too sheltered of a life if you think many lower working-class people won’t be egregiously harmed by a pro-rata return of Draconian energy taxes. You are creating just one more hardship for poorer people to deal with when, even temporarily, something in their life causes them to use an extra large amount of energy. Lower-class working people don’t deal with economic averages like you and I have the luxury to do. Many live hand-to-mouth. Even a temporary economic setback thus can easily become a long-term life-altering event.

          Your insensitivity on this issue, especially in light of your usual overall Liberal & compassionate stance, is astounding. I would suggest that on this issue, just as you do when your Black listeners call, you should recognize it is important to listen & seriously take to heart expressed feelings and stories of life experiences, as you come from such a different place.

          You and I come from perhaps as much a different place economically as the differences in perception you might have with others due to race. I have worked and mingled with the lower working class throughout my life, and my current job still puts me in daily contact with significant numbers of such people. I hear their stories everyday – it is heart wrenching. What would seem like little minor economic inconveniences & setbacks to you and me often results in such people becoming homeless, the breaking up of families, etc. I also daily see how bureaucracies such as the one you would set up to administer energy tax rebates can be so impersonal and uncaring. Even those agencies that are supposedly there to help the poor and needy are impersonal and heartless. You have no clue what you are talking about on this one – it is sad that I can’t somehow reach your sense of compassion that I know underlying all this is there.

          • halginsberg says:

            Either I’m wrong and poor people will wind up with less or I’m right and they will end up with more. I believe the latter is true.

  2. Jeff Linder says:

    So you don’t want to control a person’s diet yet your own article speaks otherwise:
    “When you raise the price of goods and services with a sales tax, you reduce demand for them.”

    • Hal Ginsberg says:

      Control implies telling people what they can and can’t do. I believe people should be free to choose to consume sugar/corn sweetener, etc. But since these products are objectively harmful except in very small quanties for the consumer and ultimately society, the costs they impose should be reflected in the price paid for them. The best way to incorporate said costs into the price of these products is to tax them.

      • Jeff Linder says:

        Hal,

        Two Point:

        1) What’s the functional difference between high tax rates to discourage activity and enacting legislation to discourage activity?

        2) No one asked you to bear the cost of other people’s poor choices. Taking that responsibility on does not grant the inherent right to now dictate choices.

        • halginsberg says:

          The first rule when you’re in a hole is to stop digging. I suggest you follow it.

          • Jeff Linder says:

            Really Hal? Were the questions that difficult? Do they expose something about your ideology that you can’t answer? You debate like a third-grader.

  3. Jeff Linder says:

    Hal, Why do you continue to tell lies about the War on Poverty?
    Here are the facts, and btw, I’ve sent you this before…my guess it your fragile ego prevented you from assimilating any of it:

    War on poverty announced by LBJ in 1964 State of Union address.

    =================

    Poverty rate
    1959: ~ 22%
    1964: ~18%
    1965: ~ 16%
    1966: ~ 14%

    The first legislation was passed in late 1964.

    So before the War was implemented poverty went from 22% to 16%.

    Then it bottomed out at 11%.

    ===============

    So how could the War on Poverty, which has cost trillions of dollars, have been so successful when it hasn’t had much of an impact in poverty rates?

    • halginsberg says:

      Interesting that you don’t cite sources for your data. From the Washington Post.

      “In 1964, the poverty rate was 19 percent. Ten years later, it was 11.2 percent, and it has not gone above 15.2 percent any year since then. Contrary to what you may have heard, the best evidence indicates that the War on Poverty made a real and lasting difference.” https://www.washingtonpost.com/news/wonk/wp/2012/07/11/poverty-in-the-50-years-since-the-other-america-in-five-charts/

      Also, of course there were very successful anti-poverty government programs that the federal government implemented starting with FDR – including Social Security, the GI program, etc., that lowered poverty rates before the “War on Poverty” was announced.

      Why can’t you accept this Jeff?

      • Jeff Linder says:

        Are you disputing my numbers Hal? Which number do you dispute? The poverty rates listed? When the first WOP legislation was passed? And why are you mixing in a supposedly self-funded program like Social Security into the discussion? Why are you including the GI Bill? The GI bill wasn’t a handout. You also like to tout Seattle’s homelessness program. Do you know there are conditions that must be met by the recipient to continue in the program?

        • halginsberg says:

          All of these government programs worked together to reduce poverty. Medicare and medicaid were part of war on poverty and they also are self-funding. Do you admit that some government programs to reduce poverty work but others don’t? Which ones work?

          • Jeff Linder says:

            I notice you’ve backed off your claim that my numbers are incorrect. Do you now accept them Hal? And the three programs you claim reduced poverty, Social Security, Medicare and Medicaid are broke.

            The facts are clear. Poverty was on the decline in the US after WWII and no improvement has been seen since the US has spent trillions on the War On Poverty.

          • halginsberg says:

            My numbers are sourced. I stand by them. I notice you didn’t source yours and you also cherry pick the years you compare.

          • halginsberg says:

            from 59-69, rate dropped from 22% to 11%. I’d call that effective.

  4. Jeff Linder says:

    Are my numbers different than yours Hal? No. If you don’t accept my numbers how can you use your numbers to prove your point?

  5. Jeff Linder says:

    Uh…Newsflash Hal,
    The War on Poverty didn’t start until late 1964.

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