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Illinois Lawmakers Consider Massive, Regressive Tax Hike On Low-Income Families (a.k.a "Soda Tax")

To our complete lack of surprise, lawmakers in the State of Illinois are considering following in the footsteps of Philadelphia by imposing a 1 cent per ounce "soda tax" on all sugary beverages.

 

And while it's being done under the guise of "improving public health," precisely zero people believe that the Nanny State of Illinois cares about the sugar intake of its residents.  Of course, the real motivation behind the so-called "soda taxes" springing up in liberal bastions across the country is the $100's of million of tax dollars than can be generated to help them grow the Nanny State even bigger.

Lets look at a quick example of how the tax dollars add up.  Lets say, just for fun, that the average person consumes one, 12 ounce, sugary beverage (soda, juice,  etc.) per day.  That would equate to roughly a $45 annual tax per person (12 ounces x 365 days x $0.01 per ounce).  Multiply that by a family of 4 and the annual tax per household is $180 or roughly 30 bps of the median Illinois household income of $60,000. 

And while that doesn't sound like much, and obviously it was designed that way, the numbers are staggering when you start to consider the statewide revenue potential.  Applying the the $45 per person annual tax from above to Illinois' 13 million people implies that the total revenue potential for state coffers is $585mm.  And, before you ask, while we understand that most infants aren't drinking a can of Dr. Pepper on the reg (although we are talking about Chicago so who knows), we also guess that most teenagers are drinking more than one sugary drink per day so just go along with our rough math here.

Of course, as the Daily Caller pointed out, Philadelphia residents have been shocked by the impact of the soda tax on their grocery bills.  And even though Mayor Jim Kenney would like for you to believe that local businesses are responsible for the cost of a 12-pack of soda doubling overnight, we suspect most Philly voters are slightly smarter than that.

Consumers are in shock at price hikes on sugary beverages across Philadelphia due to a Soda tax that took effect Jan 1, and now the mayor is blaming increased costs on businesses.

 

Mayor Jim Kenney, who lead the charge for the passage of the tax, is lashing out at the business community over higher prices, even alleging retailers of attempting to stir resentment for the tax in the community. Kenney is accusing retailers of price gouging, purposefully constructed to undermine the tax and the efforts of the local government. Retailers who are charging the tax as a separate line item or who are putting up signs specifically highlighting the cost of the tax to the consumer, are engaging in an attempt to “mislead” shoppers and are “wrong,” according to Kenney, reports CBS Philly.

 

The contentious soda tax secured passage in June but consumers in Philadelphia are still flabbergasted by the price increases the tax is sparking. In some cases, shoppers found that they were paying more for the soda tax than the actual product they are purchasing.

 

Some residents said they are going to start shopping for their beverages out of the city to avoid the onerous tax. The mayor continues to defended the tax, arguing it is the choice of the retailers to pass the added costs onto their customers, deflecting responsibility. Prices are as much as doubling on certain products due to the tax. A 12-pack of Lipton Diet Green Tea at a Save-A-Lot in the city is now priced at $8.03, instead the $4.99 it costed in December.

Meanwhile, as we pointed out back in November (see "Startling Look At How Much Money Food Stamp Recipients Spend On Junk Food"), food stamp recipients spend over $350 million per year on "soft drinks."  So, lets assume conservatively that people pay, on average $1 per 12 oz can of soda.  That would imply that food stamp recipients are consuming 4.2 billion ounces of soda per year which means that $42mm of your federal tax dollars could be going to fund soda taxes in a Nanny State near you in the not too distant future...enjoy that thought over you long weekend.