Soda Taxes: Progressive or Regressive?

Soda taxes offer a dilemma for progressive politicians. On one hand, as a social policy to relieve the impact of a disease that discriminates against poor and minority communities, it has an inherent appeal to people with a progressive social bent. On the other hand, some groups that are typically allies of progressive politicians — like the NAACP — have expressed opposition, citing the regressive impact of consumption taxes and the potential for impact on minority-owned small businesses.

As a point in case, Kirsten Gillibrand — widely regarded as a progressive since joining the Senate — recently expressed reservations about soda and junk food taxes. She characterized them as regressive and said they would leave people with less money to buy fruits and vegetables.

The evidence on potential regressive effects for a soda tax is weak and mixed. An analysis published in Health Economics last year concluded that a soda tax would be “mildly regressive,” but that the monetary amounts would be “negligible.”

Advocates for taxing soda say that the regressive effects of a soda tax are dwarfed by the regressive effects of diabetes and obesity in low-income households — a clever political jab.

In truth, all we have is speculation and data from modeling exercises. The impact from the first year of a soda tax in Mexico is unclear. In a thoughtful analysis, Tamar Haspel wrote in the Washington Post:

We cannot be sure, not by a long shot, that a tax on soda will result in improved public health.

And then she concluded, “If the choice is do this or do nothing, I choose this.”

After two decades of fighting obesity, we’re still guessing about what will work. It’s way past time for a more ambitious research effort to find solutions we know will work. Guessing isn’t good enough.

Click here to read more about Gillibrand’s comments. Click here for the study of the effect of soda taxes on low-income households and here to read more from the Washington Post.

Taxed, photograph © mayeesherr / flickr

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2 Responses to “Soda Taxes: Progressive or Regressive?”

  1. April 15, 2015 at 6:23 am, Joe Gitchell said:

    Very relevant issues and debate with cigarette tax policy, too, Ted.

    A very good summary starting at around the 50-second mark in this video:

    My simple understanding is that while a cigarette tax is literally regressive, a tax INCREASE is actually progressive. So the answer to improve health with cigarette taxes is to keep on raising them (within limits of enforcement and erosion from alternative sources of trade).

    • April 15, 2015 at 6:33 am, Ted said:

      Interesting, Joe. We have so much more experience and data to work from on tobacco taxes. But the experience is not so literally applicable to food and beverages. Thanks!