Soak the poor
Candidate Obama pledged to confine his self-predicted tax increases to fund his campaign promises to the top 5% of taxpaying Americans (i.e. "the rich" who he said earn more than $250,000 -- the top 5% of earners earn one-third total earnings and pay 57% of federal taxes -- a rather "progressive" structure). Without wandering around the issues of funding for Social Security and Medicare, discussion on Capitol Hill these days about new taxes on foods shows just how hollow can be such populist campaign rhetoric.
I remember how in my home state of Wisconsin, enactment of a sales tax was conditioned on exemption from the tax for food and pharmaceuticals, "the basics." Good lobbying? Sure. But the concept was to avoid imposing further regressivity in the tax code.
Currently, Congress is only considering a tax on soft drinks. Surely, we'd concede that Coke and Pepsi aren't essential foods. Their nutritional value isn't their selling point. So the new food tax is being promoted to promote health -- to make this "bad" food more expensive and inhibit its consumption, ostensibly to prevent obesity. Economic incentives do work. Whether they would reduce obesity is another matter. It may be that it's just a power trip for those newly installed running the government and the next "nibble" in imposing "society's" values on us as individuals and that this is a slippery slope into extending that tax to other politically-incorrect foods.
But consider a further point: the very people who rail against "the rich" would promote this tax that would largely be paid by the "non-rich."
The Congressional Research Service estimates that 96.4% of the tax would be paid by people earning less than 250,000 and 70.6% by those earning less than $91,297. Hardly confined to the rich.
Perhaps if such taxes worked to combat obesity, decision-makers might be tempted to "soak the poor" to pay for predicted healthcare cost savings, but the two states that have such taxes on soft drinks (West Virginia since 1951 and Arkansas since 1992) aren't encouraging examples (WV is the nation's 5th most obese state; Arkansas, 6th). The soft drink folks point out that soft drink sales are actually down 9.6% in the past eight years (they don't say why, but probably more people drinking water) -- but that obesity in this period is up 2.5%.
William F. Shughart II, writing in the San Jose Mercury News June 24 (article # 1148414) predicted popular resistance and noted the nations' first "food tax" provoked the Whiskey Rebellion put down by armed troops led by George Washington. A stronger parallel might be the French gabelle which cost King Louis XVI his head in the French Revolution.
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