Soda taxes disproportionately affect lower income Americans, according to a new study released by the Tax Foundation.
Taxes levied per ounce on sugary drinks by Democrats in Berkeley, Philadelphia, and Seattle are even more regressive, according to the study. The middle class would pay the most if Congress passed a nationwide soda tax, as two-thirds of its revenue would come from those earning between $20,000 and $100,000.
If an excise tax per fluid ounces were to be enacted, households earning less than $100,000 would pay 78 percent of the tax.
“Sugar-sweetened beverage taxes theoretically offer the potential for reducing externality health-care costs stemming from excessive sugar consumption, and in this way they may raise the prospect of efficiency gains by signaling to consumers these higher social costs,” according to the study. “However, these taxes also raise equity concerns to the extent these goods represent a disproportionate share of the consumption among lower-income households.”
The Tax Foundation analyzed household consumption data from Nielsen and found as income increases, soda consumption decreases. Those consuming the most soda, and therefore affected by soda taxes, fall into lower-income tax brackets.
“Using taxes to encourage healthier eating choices is a fairly recent tax policy development at the subnational level,” the Tax Foundation said. “Berkeley, California, voters passed a per-ounce tax on sugar-sweetened beverages in 2015 that has been followed by Philadelphia, San Francisco, Oakland, and Cook County (Illinois), though Cook County quickly repealed the tax after consumer backlash.”