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Taxing Issues

One on hand, the Federalist in me doesn’t care about what another state or city decides to do in the way of taxation.  They should have the ability to conduct their public business as they see fit, in the manner which most accurately reflects and addresses their unique needs.  That includes setting policy on a wide range of issues.  One-size-fits-all solutions rarely work. That’s why I generally avoid weighing in on high-tax states and municipalities.  But a tax that went into effect this week in Seattle-Washington is forcing me to break protocol.  Not just because of its confiscatory level; but the philosophies under which it was adopted.


seattle taxIt’s called a Soda Tax, but it applies to anything considered a “sugary beverage.”  Specifically, it levies 1.75 per ounce.  Hats off to Seattle-area Costco stores for making DAMNED sure their customers knew exactly why a case of Gatorade that cost less than 16 bucks last week now goes for more than 26 dollars. (see picture).


And of course in true government form what constitutes a “sugary drink” is in the eye of the government beholder.  The levy includes almost as many exemptions as Obamacare.  Suspiciously included in the exemptions are sugar-laden beverages sold by iconic Seattle businesses like Starbucks.    Starbucks, in what was most certainly a wild and random coincidence, spent $7,500 lobbying Seattle officials in the second and third quarters of 2017. They urged customers to contact the City Council after the measure passed in June.  Lobbying has its privileges.   If you’re suffering from insomnia, the list of exemptions can be read here, complete with all the gobbledygook one would expect from people who get sexually excited at the prospect of dictating the behavior of others.


seattle tax 2The Seattle Times ran this infographic that would have made Pravda’s editors jealous.  It includes verbiage that sounds as if it were written in the corridors of Seattle City Hall.  To wit: “Businesses will have to decide how much of the tax to pass down to consumers.”  Wow.  If we are to believe this we have to believe that Seattle City leaders assumed distributors and retailers would collectively eat a 20% increase in wholesale cost.  Business doesn’t work like that.  But in true Government fashion, the wonks are trying to spin it that it is evil businesses fault for passing it on to the consumer.


Let’s talk basic common-sense economics, folks.  First, let me let you in on a dirty little secret. Are you sitting down? Good! Businesses do not exist to provide jobs and healthcare. They exist to turn a profit. When they no longer turn a profit, they go under, then NO ONE has a job. Got it?  Ergo, they will make corrections to offset increases in overhead costs.  Sometimes that means fewer jobs.  Quite often it means increased product prices for consumers.  If they don’t do this, they lose money and eventually go belly-up.  That’s not terribly complicated.


Let’s explore another highly-competitive industry…gasoline retail sales.  A convenience store has a “profit margin” under which they must operate to stay afloat.  That is to say, a percentage that they must clear per each gallon of gas in order to generate enough revenue to pay the bills, workers, shareholders, etc.  If a distributor increases their cost by a nickel-per-gallon, then the convenience store must follow suit—or lose money.  If a city imposes a ten-cent per-gallon gas tax, what happens?  I cannot believe I have to explain this.


Then of course there is the ever-present “Law of Unintended Consequences.”  What do you think is going to happen in this case?  That’s right.  People are going to find a way around it.  They may order more from Amazon Prime.  They may literally drive the extra mile to go outside of Seattle city limits to buy their sodas; while presumably doing the rest of their grocery shopping there as well.  We the People have demonstrated amazing cleverness over the years when it comes to circumventing elected nuisances.  Sometimes it results in altered shopping habits.  Sometimes it results in organized crime.  Don’t believe me?  I would point you towards the multi-billion-dollar bootleg cigarette industry.  As George Will once so wisely said, “In the battle between law and appetite, ALWAYS bet on appetite.”


But there is something else at work here.  It is the same thing that fuels all of the other so-called “sin taxes” we have to endure.  The philosophy that it is government’s job to coerce us to make healthier lifestyle choices.  While I am touched by their apparent concern for my well-being, I would remind the government that it is none of their flipping business what I (or anyone else) chooses to eat and drink.  So long as it doesn’t impact other people, the government’s ONLY job is to secure individual rights; not dictate a healthy lifestyle.


Whew!  This went on a bit longer than I expected.  I need to go free-base some Mr. Pibb.

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