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.


Brando said...

Sounds like the government is deciding that soda is a "sin". Of course, where does that stop? How about taxing any meal served in a restaurant that's more than 800 calories? How about taxing all milk that isn't skim? How about the government trying to figure out how to do the few jobs it's actually required to do???

I'd be entirely in favor of eliminating the subsidies. Taxing something you're already subsidizing seems remarkably inefficient and duplicitous.

Jamie said...

Exactly. What's also troubling is that from the outset of the Healthy Schools campaign, the mission is to improve the quality of food that is served at schools.

Right now kids get served all kinds of bad stuff including sugared cereal, strawberry milk, and SODA, provided directly by the schools.

When we are giving people literally a free lunch, I'm totally in favor of dictating that diet. Get soda machines out of schools! Stop serving frosted flakes!

Wouldn't that solve the vast majority of the problem, that is, actually removing the DC government's role in serving unhealthy stuff to kids?

But that's where it should stop. The tax is not about solving this problem, that could be solved just by changing the stuff the schools serve. The tax is just another way to make money.

And yes, supposedly it's going to pay for better food - but we don't have to hire Whole Foods to cater our school lunches. Regular milk costs the same as strawberry milk. I cook for myself and there's no inherent cost in serving better food. Unless, of course, big business is involved again, and the only option you can think of is to hire Whole Foods to do your catering.

Even if it did cost more, then wouldn't the societal benefits (as are touted by the soda tax) of serving kids that better food balance the cost? Or simply tax everyone equally to pay for this cost.

Malnurtured Snay said...

I am not necessarily opposed to the tax, although the tax *rate* strikes me as absolutely ridiculous.

Also, as a p/t retail employee ... WTF. I'm still getting shit over the bag tax. TELL IT TO THE FUCKING MAYOR, LADY.

Jamie said...

If the rate was in any way reasonable, I might still be against it in principle but I certainly wouldn't be up in arms about it.

But if it was a much smaller tax then it wouldn't raise that much money would it?

This is the problem with taxing all sorts of individual things, at some point, it gets totally insane. Just raise income taxes or sales taxes or whatever which is far more equitable and gets you the money you need.

Taxing some single product excessively (unless they are genuine sins - like cigs) unfairly targets certain people, it just doesn't make sense.

Where does it end? As brando says, why not hamburgers, whole milk, ski lift tickets?

Alex said...

I posted that comment -- I don't remember deleting it and I was wondering where it went.

It's possible the soda tax was ill-designed, but in general taxes can be a legitimate and effective way to effect social change. Anyone who owns a home and has benefited from the mortgage deduction should understand this. Certain things exact a cost to society (gasoline for example) and it is reasonable to try to recover some of that cost.

Jamie said...

I am not sure what happened, I think the comment is still there but wasn't when I looked. Anyway...

I don't disagree with you at all, fundamentally, when it comes to things like sins (booze and cigarettes) Gas is even more so - because it has very well understood costs that are directly related to every drop of its consumption.

Sugar and soda is different. It's not inherently harmful and there is no one to one correlation between an individual's consumption and a societal cost. Soda is no more or less harmful than many other food products, and though overconsumption is unhealthy, that is specific to an individual and many other factors. And it's true of almost anything. There is no formula equating an ounce of soda with a cost to society for each person.

But one thing is clear - the tax rate proposed for soda is way out of proportion to the tax we levy on any other product.

Gas taxes don't come close to covering the cost of producing and cleaning up after it. Alcohol has massive societal costs (drunk driving not the least of them) yet the tax is a fraction of the proposed soda tax.

The tax on a case of soda is the same as the tax on a pack of cigarettes, or on an entire keg of beer.

I think these are too low. If we want to make things fair we should start with things that have a much more direct relationship to a societal cost than something we need to live (calories).

Anyway - it's a bit of a moot point now, since the tax is effectively dead.

I hope that we are not too shortsighted to still find a way to pay for the healthy schools program. Feeding garbage directly to kids is the problem, not soda, and we should focus on fixing that, and paying for it the way we pay for anything we think is important: through the general fund. It's fair and it gets done that way.