In addition to the federal estate tax of 40 percent (which is fourth highest in the OECD), many U.S. states levy their own estate and inheritance taxes. Estate taxes are charged against the estate regardless of who...
- Soda Tax Plans Bubbling up in California
Soda Tax Plans Bubbling up in California
Anti-Obesity Measures Miss the Mark
Washington, D.C., October 25, 2012— On November 6, voters in two California cities will consider imposing new taxes on soft drinks, with the announced goal of reducing obesity. Such tax increases would amount to a regressive burden in an already overtaxed state while likely having no observable impact on obesity or weight-related health problems, according to a new analysis by the Tax Foundation.
Measure N in Richmond, California would impose a “business license fee” of 1 cent per ounce on soda retailers, while in El Monte, California voters will consider Measure H, which imposes a “sugary sweetened beverage license fee,” of the same amount. Both towns have corresponding ballot measures which specify how the resulting revenue would be spent.
“Whatever public health problems we may face from an overweight population, imposing new excise taxes is unlikely to be the solution,” said Tax Foundation economist Scott Drenkard. “Singling out one specific category of products doesn’t address the complex health problems associated with obesity, while levying a tax on the entire population doesn’t focus on the individuals for whom the policy was implemented in the first place.”
While thirty-three states treat soda differently than groceries for tax purposes and four states currently have special excise taxes on soda (Arkansas, Tennessee, Virginia, and West Virginia), the proposals in Richmond and El Monte would be the largest taxes on soda in any American city. The penny per ounce levy would add $2.88 to the price of a 24-pack case of soda.
Research on taxes targeting ostensibly unhealthy food choices has found that the economic impact on low-income families can be twice as high as that on high-income households, while a blanket tax on soda sales will likely have an unevenly burdensome impact on poor, non-white, and non-college educated consumers.
Even when consumers do reduce their soda consumption to avoid the tax, the policy might still not be accomplishing its goal.
“While public health advocates claim that soda taxes are a useful tool to combat obesity, economic evidence shows that they have minimal effects because consumers are likely to substitute other calorie-laden products for soda,” said Drenkard. “As the economic and behavioral research suggests, the tax code is far too blunt an instrument to address such an important public health issue.”
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or email@example.com.
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