What makes a soda tax regressive?

I’ve been running in to articles about soda taxes, after Philadelphia’s three-cents-per-ounce soda tax became an issue in the Pennsylvania Democratic primary. A strange omission I’ve been noticing is that some pundits can’t quite seem to name exactly what makes a soda tax regressive.

Jonathan Chait mostly evades the issue, until claiming that Bernie Sanders’ opposition to a soda tax on the grounds that it is regressive is inconsistent with Bernie Sanders’ own tax plan:

Indeed, it is very hard to understand how Sanders’s opposition to it can be reconciled with his own platform, which — both in its specifics and its general theme — rests upon higher taxes on the non-rich. To oppose a new tax-and-transfer plan based solely on the regressive character of the financing source, without any consideration of the benefits of the spending, would rule out his own plans as well.

Chait seems to try to muddy the argument a little by arguing that a regressive tax isn’t regressive if it has progressive effects, and it is by this virtue that Sanders’ tax platform and the Philadelphia soda tax are progressive, but nestled in this argument is the implication that the Sanders tax plan is overall a regressive one. It’s hard to see how it is. A regressive tax is one that taxes a greater percentage of a poor person’s income than a rich person’s income, but the Sanders tax plan increases the tax burden of the lowest quintile of Americans by 1.2% while increasing it on the highest quintile by 12.8%.

This New York Times article gets closer to being able to explain why a soda taxes are regressive:

It can be seen as achieving an admirable public health goal of less sugar consumption or as a very regressive tax that falls more on the poor than the rich, since the poor tend to drink more soda.

It’s certainly true that the fact that poor Americans drink more soda makes a soda tax more regressive, but it glosses over the fact that consumption taxes are by nature regressive. If every American drank a single can of soda every day, they’d all pay the same dollar amount in tax, which means people with less income pay a higher portion of their income in soda tax. Rich people could drink several times more soda than poor people and a tax on soda could still be regressive, as long as the portion of their income they spent on soda (and the soda tax) was smaller.

This might warrant a separate post, but I do want to revisit the idea that a tax isn’t really regressive if it is specifically levied to fund a program that helps poor people more than they are taxed. It seems to me that revenue sources are fungible: any money going from a soda tax to a universal preschool program could be replaced by the same amount of money coming from, say, property taxes, while the soda tax revenue goes toward maintaining historic buildings in wealthy neighborhoods. Even if Philadelphia were to specifically tie the revenue from taxing soda to funding its preschool program (as I suspect it has), what if the soda tax works as intended and people drink significantly less soda? There’s probably some limit to how much you can tax soda before you reach the peak of the sin-tax Laffer Curve and people start smuggling their Mountain Dew in from Delaware. When that happens, do you find a new source of revenue (proving that the revenue was fungible all along) or leave the preschool program underfunded? I’m sure there are practical political reasons for tying a certain source of revenue to a certain program, but it’s hard to see how a progressive program can make a regressive tax into a progressive one by association.

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