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.