Opponents of taxes don’t lack for arguments. Here’s an especially creative one, against proposals to tax sugary drinks: The very debate about the tax will be a waste of money – a “social cost”! Seriously.
Here is what Professor William Shugart, II, wrote in the Wall Street Journal:
“Wasteful rent seeking by advocates and adversaries of a selective tax can swamp its social benefits, if any. Suppose that a proposed tax is expected to raise $1 million in revenue over the medium term. Producers and retailers of soft drinks will be willing to spend up to $1 million to block the tax from being enacted; groups supporting programs financed by the revenue also will spend money to pass the tax. So, if $1 million (or more) is invested in lobbying, that sum is transformed into a social cost, which must be added to the already-heavy burden that every tax creates.”
OK, it’s fair to say the debate itself may tend to raise soda prices. Soda sellers will either swallow the cost of the debate, or pass it on to consumers. And the spending for that debate will go to consultants, and media, and pollsters – not to the public. (Part of the anti-tax view in many cases, it seems to me, is that the government is the enemy of the public, not its servant. Professor Shugart says a soda tax “will generate more of other peoples’ money for profligate state governments to spend.” Lots of people don’t trust government. The Founders would understand. But take distrust too far, and you’ve got anarchy.)
I have no problem with calculating the cost of political debate. But to tally that cost as a bad thing, seems weird – and undemocratic. Are other political debates “social costs” that we should avoid? I’m still thinking about this. The “social cost” of money spent to oppose soda taxes doesn’t bother me, somehow. That’s free speech, at least under Citizens United, and who’s against free speech?
Professor Shugart has been opposing taxes for a long time. His 1997 book, Taxing Choice: The Predatory Politics of Fiscal Discrimination, is one of the first sources I ran across when I started studying sumptuary taxes.
Here’s the link to the WSJ article, and to a counterargument (more sensible to me) from Kelly Brownell, Dean of Public Policy at nearby Duke. http://www.wsj.com/articles/should-there-be-a-tax-on-soda-and-other-sugary-drinks-1436757039