When asked if raising taxes could affect the purchasing habits of Americans, the Democrats tells us there is no proof of that.

The AP is reporting on the United Nations World Health Organization (WHO) recommending that countries use their tax policy to increase the price of drinks containing high amounts of sugar to combat the obesity crisis around the world, including the United States.

If increasing taxes in one area does not affect the purchasing of products or services why would it affect someone purchasing sugary drinks?

The U.N. states that 40% of the world population is obese.  They believe that a 20% increase in the retail prices of sugary drinks would result in a proportional reduction in consumption.  A 20% increase in the price of sugary drinks would be quite a hit to the wallets of people in the lower tax brackets.

Has sin taxes as they are called really stopped the purchasing of cigarettes or alcohol?  According to Investopedia a “sin tax” is a state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling.

Some would say yes because the amount of people smoking has decreased.  Has cigarette smoking decreased because of taxes or people are becoming more aware of the adverse health effects.  Certainly alcohol consumption has not decreased because of taxes.

I believe the idea that lower taxes generally does stimulate growth is self-evident.   Let us look at the extremes if you consider a 100% tax on income. If everything you earn is taxed by your government who would be willing to work?  Now let us look at the other end, if there was only a 1% tax would that stop anyone from working? People would have more money in their pockets thus they would spend more.

The real question when discussing the tax rate is at what tax rate does taxing become self-defeating?  That is where the Laffer Curve comes in to play.  According to Investopedia:

The Laffer Curve is a theory developed by supply-side economist Arthur Laffer to show the relationship between tax rates and the amount of tax revenue collected by governments.  The curve is used to illustrate Laffer’s main premise that the more an activity such as production is taxed, the less of it is generated. Likewise, the less an activity is taxed, the more of it is generated.

Sounds reasonable to me, does it sound reasonable to you?

Also a tax on sugary drinks is a regressive tax.  A tax that would affect the lower income brackets more than the higher income brackets.  Is that what our elected politicians want?

Also do we want the United Nations making recommendations to governments, especially our government, on tax policy?  What ideologue do you believe would be more likely to seriously consider the recommendations of tax policy from the United Nations?

Let’s talk about this today on The Live with Renk Show which airs Monday through Friday 9 a.m. to noon. To let me know your thoughts during the show please call (269) 441-9595.