Wednesday, May 19, 2010

what goes around comes around

This proposition has a very interesting dynamic to it that I think Leonhart missed. As we all know, the reason coke has decreased in price while good foods have more significantly more expensive over the last 30 years is because of the switch from sugar to high fructose corn syrup and the attendant massive federal corn subsidy. Coke is cheaper because it's steadily gotten cheaper to make.

Consider, too, that counties and municipalities have been getting shat on from a fiscal standpoint by the federal government (and state governments, as well) since the Bush years. They've been getting less help and more underfunded and unfunded mandates as irresponsible presidents, congressmen, and governors pass tax cuts and restrict funding, effectively pushing the tax burden down to municipalities.

A city government like DC taxing the f**k out of a product that benefits from heavy federal subsidies is a clever way to reclaim some of that lost tax revenue. On the other hand, it's unlikely that Coca Cola will eat that cost rather than just passing it on to the customer, so what really ends up happening is taxpayers continue to pay twice for the same product while no longer getting the benefit of lower prices that is the raison d'etre for the subsidy.

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