Thursday, May 27, 2010

Sales Tax on Soda Tax Passes

With little fanfare DC expanded their general sales tax to include soda.

The tax appears to apply to the same products that the original ill-conceived soda tax would - only those with sugar.

This is a far more reasonable tax. In fact I don't see why it wouldn't be expanded to include any kind of junk food.

The tax rate is the same as that on many other goods that are already taxed in DC. A $0.99 2-liter bottle of coke will get taxed at 6 cents, proportional to its cost, not 67 cents, proportional to it's volume.

I'm not sure why they would just tax sugared sodas, though. This makes implementation difficult. Practically speaking, any business that doesn't operate with a computerized scanner checkout system (e.g., anything other than big supermarkets) will probably just pay the tax on the bottom line for soda they buy from the distributor, and raise prices across the board. It's too complicated for a corner store to expect their employees to figure out at the point-of-sale which drinks must be taxed and which must not.

Likewise, I remain unconvinced that potentially cancer-causing artificial sweeteners are any better for you than sugar. But I have been called crazy before, so that's just me.

At the end of the day, the tax rate is totally reasonable, and hopefully this will put to rest the insanely high per-ounce tax, and the frightening precedents that would have brought.

Thursday, May 20, 2010

Big Business, Soda & Corn Subsidies

Someone posted and deleted a comment to my last post about the soda tax. I won't identify them, because obviously they chose to retract their comment, but I did want to respond to it because I don't think it's an uncommon reaction to this kind of position:

"The American Beverage Association, and its simulated grassroots spinoffs that have been set up to oppose this, thank you for your time and effort on their behalf. "

In opposing the beverage tax, I want to make a couple things clear.

I realize that the soda industry, like almost every other industry (such as the snack food, alcohol, automobile, oil, hemp, solar power, and gastroenterology industries) has an association and a lobby, and spends lots of money to promote its agenda. Of course, the bigger the industry, the bigger their lobby. But if we were proposing a tax on something that hardly anyone ever bought, would anyone really care?

If I based my positions simply in opposition to those of big business, would I be any more a thinking person? The fact that a big company happens to have financial incentives to take a particular position, is not a good enough reason to oppose it.

I also realize that corn production is subsidized in this country. Actually, it is the most heavily subsidized agribusiness by far, to the tune of something like $4 billion a year.

I am not in favor of this. While the DC government is not the Federal Government, I hope that the irony of a country that subsidizes production of corn syrup, and then at a local level taxes the same, is not lost.

Oh, the humanity.
This blog discusses this irony, noting that President Obama himself has suggested exploring a soda tax. Wait, the president wants a soda tax, even though we subsidize high-fructose corn syrup? *shakes head* Something is wrong here.

Even if I thought that the best way to deal with a ridiculous situation where our Federal government is complicit in the production of cheap soda was to tax it at the other end, which I do not, the tax being proposed is far higher than the subsidy. From the blog above, the Joint Committee on Taxation calculated that a 3-cent tax on each 12-ounce sugared soda would raise $51.6 billion over a decade, about $5 billion a year.

That means that a tax of 1/4 of a penny per ounce would raise about the same amount of money that is spent annually on corn subsidies. From grist, we learn that only 3.5% of all corn in this country ends up as corn syrup. Multiplying that 4 billion annual subsidy by 3.5 percent, we get a figure out about $140 million a year going to subsidize soda production - assuming that every single drop of corn syrup ends up in a can of soda. Which obviously it does not.

This means that a tax of a penny per ounce equates to about 142 times the amount of the Federal subsidy on high-fructose corn syrup.

I am against taxing soda (or any non-"sin" item) at an excessively high rate.

Soda, unlike cigarettes and alcohol, does not have any inherently illness-causing ingredients. Ironically, the only soda ingredient that has been proven to cause cancer, like both cigarettes and alcohol can, is artificial sweeteners, yet diet sodas are excluded specifically from this tax.

If you think sugar is a luxury, inherently bad, and not necessary for human survival, such as alochol and cigarettes are, then tax all sugar. Or tax all food, since soda only accounts for 11% of the calories estimated to be consumed by most people.

My positions today, as always, are based on my own opinion. Because almost every industry has a lobby, if that position happens to be against taxing something that I also am against taxing, then by gosh I guess I'm going to be on the same side as whatever industry it is being taxed.

Tuesday, May 18, 2010

Mary Cheh's Soda Myth

Counclimember Mary Cheh's web site touts 10 myths about DC's proposed soda tax.

Unfortunately, all she does is what politicians do best: spin. Let's take on a few of her myths. But before we begin, let's address the big white elephant in the room that the soda-tax proponents never seem to remember.

DC is proposing a soda tax more than ten times higher than our beer tax, more than four times higher than our wine tax, and barely lower than our hard liquor tax.

DC's alcohol tax rates are 9 cents per gallon of beer (or 7/100 of a cent per ounce), 30 cents per gallon of wine, and $1.50 per gallon of liquor. The soda tax of 1 cent per ounce is equivalent to $1.28 per gallon.

If this tax passes, it will really mean just one thing: the liquor lobby is stronger than the soda lobby. I can think of no greater irony in a city with a massive alcohol abuse problem than taxing soda at a rate over ten times higher than beer.

But on to Mary's Myths.

Supposed Myth: The soda tax would tax ALL beverages.
Mary's Myth: Only sugar-sweetened bottled beverages would be taxed. Diet soda, non-caloric beverages, milk, juice, and water would be excluded.

Remember back in 1776 where we got fed up
with them stupid kings taxing our cup of tea?
I guess those who forget their history
are doomed to repeat it.

First of all, that's incorrect from the outset, since most beverages are sweetened with corn syrup, not sugar.

Second, the legislation only excludes drinks that are more than 70% juice by volume. Have you ever looked at the actual juice content of a bottle of fruit juice? Unless you're buying orange or apple juice, it's probably under 30%. Many juices are way too strong to drink straight. Ironically, those that are frequently considered the most healthful (like pomegranate and cranberry) are in this category.

Finally, this tax (draft legislation) covers all beverages except those specifically excluded. It includes coffee and tea if a sweetener is added at the point of sale.

That's right. They finally did it.

They taxed our cup of tea.

Think about that last one for a minute, by the way. Coffee and tea are taxed if sweetener is added at the point of sale. Do any coffee shops actually ask you if you want sugar in it, rather than you putting it in yourself? So basically Starbucks will start charging you 20 cents for a pack of sugar, possibly making DC the only place in America where a cup of drip coffee could cost you over $3.00.

Supposed Myth: A soda tax would send grocery sales to Maryland and Virginia.
Mary's Myth: Because soda taxes cause consumers to substitute goods, residents would continue to purchase groceries in the District. Funds raised by the soda tax would build more grocery stores and bring more business to the District.

Well, that is really quite an astounding presumption. Unlike "plastic bags," where you can easily substiute something just as functional, most people won't suddenly decide they prefer Diet Coke or seltzer water to Coke because of a tax.

Personally, I think sugar is a lot better for you than artifical sweeteners that have been proven to cause cancer, too, but that's just me.

Luckily, we just had a test case for this exact situation, involving a product with no substitute. DC raised it's cigarette tax by 50 cents per pack in October, making it the highest in the region. In FY2009, DC earned $37.6 million in revenues from smoke tax. They projected $45M when they raised the tax, obviously unaware that consumers tend to buy things where they are cheaper when it's just as easy to do that.

On Feb. 24, the CFO announced that cigarette tax revenues were (shocker) significantly off and they were revising the revenue projection to $30M, $7 million less than before the tax.

DC is 65 square miles, and has a border about 30 miles long. This means that probably about half of all DC residents even live within a mile of the border of VA or MD, and tons of them work there too. Now I'm no rocket scientist, but I'm guessing it's pretty damn easy for a large part of DC residents to choose to shop in Maryland or Virgina.

I'm guessing that the 50 cent tax didn't actually cause a 50 percent drop in smoking in DC, and that the money's just going to our neighbors instead.

Given that the soda tax is pretty substantial, I mean, we're talking 64 cents for a single 2-liter bottle of soda, or $2.88 for a case of cans, you don't think there's any reason this would drive business out of DC?

But Maryland and Virginia also tax soda don't they?

Yes, they do.

Maryland taxes soda at a rate of 6%.
Virginia’s rate is 1.5%

For a 99-cent bottle of Rock Creek Soda, DC's proposed tax rate is about 65 percent.

Say that again.

Sixty Five Per Cent.

I will leave you now, and return to some more of Mary's Myths later.

Monday, May 17, 2010

Ironic Mail Day

You're being investigated by the FBI but have a nice day!

Have A Nice Day

The Federal Government should institute a policy of adding "DON'T PANIC" to any mail from any government agency, especially those that include the word "investigation," in the interest of reducing the incidence of heart attacks in the general public.

At Least We've Got The "Taxation" Part Down

The District of Columbia is the only place in the United States where U.S. citizens are expected to pay Federal taxes, yet have no congressional representation. That this is bad, is something that I think every D.C. resident can agree upon.

Life is nothing if not filled with ironies. D.C. is also one of the most heavily-taxed places to live in the United States. In 2008, DC ranked 8th among all U.S. "states" in overall local tax burden, according to the Tax Foundation.

Not satistfied with that rank, though, DC is pondering the list of things that currently are not taxed. The first one is a tax on soda, with the idea being that we can make money at the same time as discouraging unhealthy beverage drinking habits.

Ironically, this is at the same time as a tax on yoga and health club memberships is being considered.

The soda tax being proposed is 1 cent per ounce of soda.

Let me put that in perspective.

Two-liter bottle of soda: 65 cents.
Six pack of coke: 72 cents.
Case of coke: $2.88

How much does a two-liter bottle of soda usually cost? Maybe $1.69 if it's a brand-name. $0.99 if it's Rock Creek or whatever. This will nearly double the cost of a bottle of cheap soda.

A case of cheap soda, or even name-brand soda on sale or at a place like Costco, is usually around $6 or $7. This will add 50 percent to that cost in DC.

Our tax on beer is 9 cents per gallon, or .07 cents per ounce. 7/100 of one cent per ounce! We're going to tax soda at more than ten times the rate of BEER?

Each new tax we add, especially those that directly affect your grocery bill, increases the chance that people will say "enough is enough" and, at the margin, choose to shop outside DC. In the long run, these insults affect people's decisions about where to live. And in DC, you have two other easy choices.

What is healthy living?

Anyone who hasn't lived under a rock knows that just about every single food product on Earth has been both praised and vilified over the years. Carbohydrates? Bad. Let's tax flour. Fish? Lots of mercury, bad. Fat? Bad. Let's tax butter. Oil? Bad. Salt? Bad. Potatoes? Bad.

Food choices are a lifestyle decision. You know what other things affect your overall health?

How much you exercise. Where you live. What kind of job you have. What your recreational activities are. Who your parents are.

Everything IS BAD. There is nothing that won't kill you. But the impact that anything has on you is not directly related to that product -- it's related to your lifestyle. When I was running marathons, I ate unbelievable amounts of sugar, carbohytrates, and greasy food. And my cholesterol and body fat counts were enviable. Probably not so much any more... but I blame my broken foot for that. Of course, that injury is also related to running, so obviously we should tax exercise! Oh yeah... we're thinking about that, with the yoga and health club taxes.

You can't make everyone pay back society in the exact propotions to the risks of their activities. Besides which, your genetics may have a lot more to do with your overall risk than anything else.

We are on a dangerous path towards taxing things that the current fad says is bad for you. Are we really ready to put a tax on flour? Because this doctor says that "full elimination of grains" is the only way to ensure heart health.

Obviously, it's time to start taxing dirt, because everything that grows from it will kill you.

Friday, May 7, 2010

Good Fortune


Everything is falling into place.

Wednesday, May 5, 2010

Major Facebook Security Bug -- On Top Of Bad Policy

Facebook recently added this "Connections" feature which many of you probably unwittingly signed up for. I did. Each time you would log onto facebook, it would give you the opportunity to convert all the things you entered into your profile page into "connections" -- your music, likes, interests, and so on.

Programming: Scary and Insecure

Facebook "Security"I'll explain the new policy below, but far more frightening is a bug I came across while messing with the new privacy settings.

The picture at left is my profile as it would appear to one of my friends. This is something you can do in Privacy settings.

Those chat windows are not mine.

Those message waiting, friend request, and status update indicators are not mine.

I can see my friends' outstanding friend requests, and type in the chat windows.

I have no idea what the practical implication of this bug might be, but it is very clear that Facebook's code does not isolate your profile and session information from others at a basic level. Like a jilted lover, Facebook has become scary and insecure.

There is no way that any system with a functioning security model would ever let something like this happen. What this means is that information which should only be available to my friend when they are logged in, was shown to someone else.

My Friends' Friend Requests
My friend's friend requests.
I am not nearly this popular.
Let me repeat this. This should never happen, ever. Even if someone made a programming error in this section (that shows you what your profile would look like to someone else) -- there is no way I should ever have seen open chat windows or friend requests. That information, related to my friends' profile and session, should be at the highest possible level of security in Facebook and never shown to anyone other than that specific user, when they are logged in.

This raises serious concerns about the hackability of Facebook - that is, it's almost certainly vulnerable to fairly basic security exploits. Core profile information is not only unprotected at a basic level but was shown to me accidentally.

Is this bug reproducible?

Yes. I have a "joke" facebook account that is friends with a few of my friends. I sent myself a message from the "joke" account, and opened up a chat window in my real account.

When logged in using my joke account (from a different computer entirely) and viewing my "joke" profile as my real account, I could see the message waiting indicator, and the chat window that I had open in my real account.

Did you tell facebook about it?

Yes, and it sure took some doing to find their bug report form. Now taking bets on how soon it will be before my account is disabled, which is their usual response to any communication about a problem.

This Isn't Exactly Rare

After a bit of googling, there are numerous reports of similar security breaches in the last couple months, which further reinforces just how shaky the basic security design of Facebook is.

Faceook bug might have exposed your inbox - February 25, 2010

Facebook bug delivers mail to the wrong people - February 25, 2010

Facebook bug exposes private email addresses - April 1, 2010

Policy: Bad

This change came with new privacy settings, which seems to be a fairly routine event these days. Most people probably didn't realize that by finally acquiescing to the "connections" thing, you made all that information public. This article explains what "connections" does to privacy. The long and short is that anything you "like" is now publically associated with your name, and there's nothing you can do about it.

Supposedly, you can prevent your "likes" from appearing directly on your facebook page, though in practice that does not seem to work. But even if you could, from the viewpoint of the thing itself that you are "liking," your name will show up on their list, meaning that it will end up in every marketing database known to man.