21 June 2010

meanwhile back in the real world

When we're busy trying to tax soda, there's this other thing out there that is taxed, is accepted as a taxable excise product already, and we could probably tax more. It's not income or sugar.

It's booze. Sorry. It doesn't seem like it actually cuts back on people consuming adult beverages for the good news. Ireland and Germany and France are notorious for drinking. They all have higher taxes on it. Probably with good reason given the externality effects (fights/assaults/domestic abuses, additional costs for police and criminal detention, late night phone incoherent calls, and car accidents).

But the big one is DUIs and injuries or deaths related to alcohol involved crashes. And it's clear that a tax on alcohol is not necessarily going to banish that problem (or be politically possible to pass a tax high enough to account for it in the first place). Smart cars are my bet to resolve that problem. But of course, we have to get there first.

Do try looking up the actual article and the prospect of capturing public externality harms and costs through taxation, and the probability of doing so instead of taxing something genuinely useful like, I don't know, income or food.

I've considered that it's unlikely we'll reduce less useful taxation and this will therefore be simply another tax levied. But I would also like the deficit to close and I don't think spending cuts on social welfare are very likely at all under any administration, this one or a GOP one, at any time soon enough to make such cuts useful and less painful. Even though I fully support very drastic cuts to much government spending and many useless programs, the reality is that taxes are going to have to go up somewhere. People like me are going to lose the debate over cutting spending in a sane manner. A fallback position is needed to prevent catastrophe or at least more drastic and structurally hazardous methods.

May as well be taxing some things that capture externality costs and cover harms: alcohol, tobacco, carbon/gasoline, traffic congestion, pot, etc, instead of just hiking the marginal income tax rates in order to push the conversation in a direction that does less harm overall and helps achieve a sensible public policy goal (marginal reduction in harms caused by alcohol abuse and a marginal decrease in federal or state government deficits).

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