Tax Reform

Support for Soda Tax Fizzles in Cook County

Tax-and-spend proponents have a serious problem when even the greater Chicagoland area, long known as a city that soaks taxpayers, heeds citizen uproar and moves to repeal a tax.

The Cook County Board of Commissioners passed a penny-per-ounce sweetened beverage tax last year, making Cook County the most populous municipality in the nation to implement this sort of tax. The tax currently applies to a wide swath of beverages, including “soda, sports drinks, flavored water, energy drinks, pre-made sweetened coffee and tea with less than 50% milk content.” Thankfully, most individuals on the Board of Commissioners are backtracking after increasingly apparent constituent disapproval, voting 15-2 to repeal the harmful tax. A nearly 87 percent disapproval rate is impossible to argue with. ALEC applauds this bipartisan decision and is hopeful other municipalities will follow suit.

Cook County, which incorporates Chicago, is the second-most populous county in the nation, with over five million residents. As the largest county in the state by far, much of the big-government policies that rule Cook County impact the rest of the state. Combined state and local taxes across the Land of Lincoln place a hefty burden on all Illinoisans – one of the highest combined tax burdens in the nation, in fact. In this past legislative session, this burden grew steeper as a variety of taxes were implemented or increased, including the water and sewer tax, the personal income tax and the property tax. As illustrated in Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, in all 10 editions of the book Illinois has remained in the bottom 10 in terms of economic outlook, driven largely by too many taxes and bloated state and local governments. It should come as no surprise, then, that the sweetened beverage tax was sold to the public as a measure to help fill budget gaps that are ubiquitous in the leaky coffers of Illinois’ government.

This type of targeted and discriminatory taxation is fundamentally a bad way to raise revenue because of instability and unpredictability; results from the soda tax passed in Philadelphia exemplify this. Consumer behavior is difficult to forecast, and dollars promised to fund programs nearly always fall short of expectations. In the case of Cook County, it is not difficult for consumers to drive short distances outside of the county and purchase a non-taxed sweetened beverage.

While the need to fill budget gaps is one justification for implementing a soda tax, the Cook County Board also claims it would help decrease obesity and related health issues. A little common sense and research about the many interacting factors that influence overall health, diet being just one, shows the jury is still out on the extent to which sweetened beverages negatively influence health outcomes. As a Gallup study notes:

“Overweight Americans are just as likely as those of a healthy weight to drink regular soda — it is diet soda that the overweight are much more likely to drink. It is possible that overweight Americans have become more aware of regular soda’s high caloric level and could have disproportionately shifted to diet soda, making the exact relationship between consuming soda — regular or diet — and being overweight hard to decipher”

While sweetened beverages taxes across the country are sold as just another tax on “big business,” it shouldn’t be news to anyone that corporate taxes are ultimately borne by consumers – everyday American citizens. Unfortunately, sweetened beverage taxes are discriminatory in nature, and affect both the young and poor the most. This tax also disproportionately affects industries related to the manufacturing and distribution of sweetened beverages and will harm mom-and-pop stores and small businesses the most.

Hilariously summed up by the Chicago Tribune Editorial Board, elected officials “didn’t have the guts” to increase sky-high property tax bills even more, so instead here we are with the sweetened beverage tax. Put simply, it is not the place of the government to force Americans to refrain from consuming beverages of their choice. If this sort of taxation is permitted, special interests will soon argue budget shortfalls can also be plugged by taxing other “obesity-inducing” products like ice cream or fried chicken. State legislatures would be prudent to consider legislation that preempts municipalities from passing these sorts of harmful taxes, some form of which has been implemented in nine states and is currently being considered by Michigan.

Please, Cook County, keep your hands off Chicago deep-dish pizza.


In Depth: Tax Reform

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish. A…

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