The last thing most consumers want to hear—especially around April 15—is that they should be paying more in taxes. But for a wide range of reasons, including health, safety, fairness, the environment, and simply raising more funds for government projects and infrastructure, some say higher taxes are needed in the following categories.
"In 1951, the federal excise tax on a standard shot of 80-proof whiskey was about 90 cents in today's dollars. Today it stands at about 13 cents, a seven-fold decrease," the Washington Post noted recently. "The real federal beer tax has fallen about fivefold over the same period, with a more modest drop for wine."
That and other articles point to new research from the University of Florida, which shows that higher alcohol taxes can save lives—because people drink less when booze costs more. "Alcohol tax increases implemented across the country could prevent thousands of deaths from car crashes each year,” said Alexander C. Wagenaar, a UF College of Medicine professor and one of the researchers involved in the study.
Commonly referred as a junk food tax, the Healthy Dine Nation Act went into effect on April 1 in the Navajo Nation, which extends into parts of Arizona, Utah, and New Mexico. The law adds a 2% tax on chips, fried foods, soda and other sweetened beverages, and other products with "minimal-to-no-nutritional value." Funds raised from the tax are supposed to be allocated to health initiatives, including exercise facilities and community gardens. The tax is also aimed at dissuading people from eating poorly—diabetes, hypertension, and cardiovascular disease are all big problems on the reservation.
The idea of a state or national junk food or "fat tax" surfaces from time to time, with proponents calling special attention to how costly obesity is. "America spends $96 billion treating diseases caused by cigarette smoking—far less than the $190 billion spent on obesity," the Committee for Economic Development noted last fall. Yet some research indicates that to be noticeably effective in changing consumer behavior, a junk food tax has to be big, perhaps 20% or higher.
While a blanket junk food tax would include soda and sweetened beverages, some health advocates specifically target soda as especially appropriate for a new tax. The nation's first soda tax was passed in Berkeley, Calif., last fall, and lawmakers in San Francisco have been trying to reduce soda consumption, via possible taxes and package warnings among other measures. Several other cities have tried (but failed) to institute soda taxes, and we'll have to wait and see if Berkeley is a trendsetter or an oddball anomaly. One 2014 study suggests that a tax equivalent to 6¢ on each 12-ounce soda would significantly curb soda consumption.
The idea of hiking gas taxes has grown more popular since gas prices collapsed in the U.S. The national gas tax hasn't budged since 1993, and the thinking is that people will be more open to higher gas taxes at a time when the cost of gas is cheap. Forecasts call for gas prices to stay low indefinitely, and that makes it more likely that a gas tax increase will happen.
One problem with taxing gas is that today's drivers use less of it, thanks to the rise of alternative-fuel cars and across-the-board improvements in fuel efficiency. After all, when people use less gas, they pay less in gas taxes too, and plummeting gas taxes collected means that there are fewer funds to keep our highway infrastructure from crumbling further.
One frequently suggested alternative to taxing gas is taxing miles driven. This concept is riddled with unknowns, but we should all know more about how such a system would work in the near future. An experiment charging a few thousand drivers 1.5¢ per mile gets under way in Oregon starting this summer.
According to a 2015 Pew Charitable Trusts study, two states already tax e-cigarette sales (North Carolina and Minnesota), and proposals to add e-cigarette taxes have been on the table in at least a dozen more states. Among them, Ohio is considering a tax that would effectively triple the current cost of electronic cigarettes.
Last month, a group of U.S. senators introduced a new version of the Marketplace Fairness Act, which would allow states to collect sales tax on purchases made in other states. Somewhere between one-half and three-quarters of American consumers already pay sales tax on Amazon.com purchases, but there are many examples of online purchases that still aren't taxed.
"The free ride," as a recent Pittsburgh Post-Gazette editorial called it, "comes at a cost: a decline in tax revenue, with a corresponding decline in government service, and a system that unfairly favors online retailing behemoths at the expense of brick-and-mortar stores close to home."