Guest post: the tax that refreshes

The logic backing soda taxes seems to be ironclad. Americans are too obese. Soda consumption contributes to obesity. Tax soda, and people will drink less of it. Then, Americans will become less obese. Better yet, use the revenue from the tax to further reduce obesity, as through education or subsidies to healthier foods. As Jamelle has written in past posts, it is a desirable cascade of events. But the problem is that a soda tax (and any appended transfer program) will quite possibly achieve none of its goals, yielding only inefficient enforcement costs.

The first pillar of soda taxes (indeed, any obesity-targeting food tax) is the relation of soda and obesity. As the well-worn argument goes, when cheap corn was turned into cheap high fructose corn syrup, and the latter was used to make cheap sodas, a deluge of empty calories entered the American diet. Since overweight is caused by consuming more energy than one uses, soda has contributed to obesity by providing a ready source for excess calories. But soda isn’t necessary for obesity, especially since the rest of the American diet is little better. Hence, the relationship between soda and obesity isn’t a straight shot. It may well be the case that if people don’t get fat by drinking soda, they’ll get fat by ingesting something else.

The second pillar of soda taxes is the idea that taxing soda will reduce consumption. This is actually not that controversial, but discussion of soda taxes often lacks perspective on just how much soda consumption will be reduced by any given tax. As one soda-tax crusader, Michael Jacobson, promises, levying a tax of one cent per ounce will reduce consumption by at least 10%. By Jacobson’s own statistics, that comes out to a consumption reduction of a fifth of a can (for teenage girls) to a third of a can (for teenage boys) per day. And this is what’s going to roll back obesity?

Let’s step back for a second, and look at places in America where soda is already expensive – by much more than 12 cents per can over the regular price. I am thinking, of course, of airports and highways. As any traveler will attest, soda can easily cost double and triple in rest stops or airports. It’s hard to say what effect these markups have on soda consumption (obviously, people are still buying the stuff), but it’s a little easier to judge whether sky-high soda prices translate to less obesity. In at least one large survey of truck drivers – a population especially exposed to high soda prices – the obesity rate was 48% higher than the national one. (A cursory search did not yield the relevant figure for airport workers, who would be a good comparison group.) It is impossible, of course, to draw from these sketchy facts a solid prediction about how soda taxes will affect the American population. But there remains great cause for concern that if soda prices are raised a little (which is what all soda taxes on the table are really proposing) then either soda consumption will not waver, or some other nutritionally-poor substitute foods will be found, and Americans will march on, large as ever, into the future.

But what of that third pillar of soda-tax proposals – using the revenue for some worthy cause? Particularly, if one concedes that raising the price of soda will not check the rise of obesity, there is still the possibility that the revenue from a soda tax could be used for some good cause – educating Americans about nutrition, or subsidizing healthier foods. This seems at once the most promising and least certain aspect of soda taxes. It is most promising because the tax itself would probably not be so prohibitive as to greatly decrease soda consumption, nor so comprehensive as to turn Americans off of the wider spectrum of nutritionally poor foods. Yet it is least certain because, as far as I can tell, no one has any (proven) idea how to use this revenue to fight obesity. Neither educational efforts (the Food Pyramid; nutrition facts labels) nor food subsidies (WIC; food stamps) have successfully reduced the prevalence of obesity. In fact, for large populations, the trite line – “no one knows how to make a fat person thin” – is starkly true. So any anti-obesity program to be funded by a soda tax is highly speculative.

No one is claiming that taxing soda will be the silver bullet that will fell obesity; nor, conversely, that carbonated extra-sugar sugar water is now priced with perfect efficiency which no tax should disrupt. On the surface, a tax on soda is logical, doable, and seemingly effective. Unfortunately, under greater scrutiny such a tax seems ineffective at its stated goal of reducing the obesity rate – both directly through increasing soda prices, and indirectly through any plausible program into which the revenue might be funneled.