Philly’s Soda Tax Fizzles….Another Liberal Failure

When will the libs learn that their policies just do not work?

The latest victim is the ridiculous “soda tax”.  Liberals are always trying to tell us what to do and how to do it.  It’s so funny that they constantly try and extend their morality onto the public, while at the same time trying to claim they are inclusive and “open minded”.

If you’re so open minded, why can’t you just let me enjoy a Pepsi without paying more in tax than I pay for the actual soda!


Here are the details, from fmshooter:

The failure of this tax is about as surprising as seeing the sun rise in the morning.

The Burning Platform in particular has covered the tax on many occasions: here, here, here, and here, and they’ve been excellent at demonstrating the lunacy of the tax itself: While the tax is technically 1.5 cents per ounce, which doesn’t sound too terrible, when buying a 10-pack of 20 oz bottles those numbers climb pretty quickly.

In this case, a 10-pack of Propel flavored water that originally retailed for $5.99 had an additional three dollars tacked on to it in taxes. Chuck Andrews picked up a $1.77 gallon jug of tea, got home and looked at his receipt. “When I read the receipt I’m like, ‘Wait a minute. I paid more in tax than I did for the product,’” Andrews said.

The tax on the $1.77 gallon of tea was $1.92 cents. The failure of the soda tax is but a microcosm of the failures of “MOAR” taxes to solve budgetary problems. At a certain point, if you raise the tax enough, you will start to take in less revenue. Unsurprisingly, behavior is modified when you tax soda to 100%, and less income is generated as a result: To hit its annual target, the city needs to collect $7.6 million a month in tax revenue. The first collection was due Feb. 21 but collection information won’t be available until next month.

Early projections from the city’s quarterly manager’s report predict only $2.3 million will come through in the first collection. This brand of Democrat politicians and tax-and-spend policies is hardly limited to soda – a much bigger, more pertinent example is that of state income taxes. In their quest to fund their ever-increasing municipal and state budgetary shortfalls, Democrat politicians think that the easiest solution is to just raise the income tax, particularly on high earners.

It seems that none of them have ever taken even the most rudimentary of economics classes, as they have absolutely no understanding of the concept of “optimal tax rate” and why it is important. The idea is simple – there’s an “optimal” rate where the state collects the most income from taxes, based on how much citizens earn/spend, which of course also depends on the type of tax. So, what happens when states raise their taxes on their top earners?

There are plenty of examples to look at, but the result is almost always the same – the state takes in less revenue from those in the top brackets. It doesn’t take a genius to figure out why – a percentage of the top earners simply pick up and leave. It is an example of the optimal tax rate being below wherever they raised it to, and possibly even below the existing rate.

Maryland increased their state income tax ten years ago, and predictably, it backfired: The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a “millionaire’s tax” pushed through by Gov. Martin O’Malley. The tax, which expired in 2010, in imposed a rate of 6.25 percent on incomes of more than $1 million a year. The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues.

A county-by-county analysis by Change Maryland also found that the state’s wealthiest counties also had some of the largest population outflows. So what did Governor Martin O’Malley do after this happened?

You guessed it – MOAR: O’Malley and the legislature increased income taxes again in 2012, arguing that the state needed more revenue to maintain education spending. In all, Maryland’s income tax became significantly more progressive during O’Malley’s term. But there were regressive tax increases, too.

The 2007 Tax Reform Act also raised the state sales tax from 5 percent to 6 percent, and the cigarette tax from $1 per pack to $2 per pack. In 2011, the state’s alcohol tax went from 6 percent to 9 percent and two years later, annual inflation-adjusted gas tax increases were created as part of a larger transportation bill.



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