It’s not just good policy ideas about Medicare and health care costs that fail to become law because entrenched interests oppose them. Good tax reform ideas also die because powerful businesses and interest groups are threatened by them—a fact that helps make our tax code the loophole-ridden mess it is today.
Everyone—even Center for American Progress bloggers like the estimable Matt Yglesias—agrees that “higher taxes can have genuine deleterious effects on the economy.” So the ideal tax system would raise the revenue we need while discouraging good things like work, investment, and savings as little as possible. And since higher taxes on x tend to discourage x, it makes sense that we should focus taxes on things we want to discourage—especially things that produce negative effects we all have to pay for in the long run. And that category mostly includes things that despoil our environment and things make people sicker, dumber, or deader.
Of course, the people who make and sell the things that despoil our environment and/or make people sicker, dumber, and deader don’t want to be forced, via taxes, to pay for the true cost their products inflict on society. Yglesias points to a great example of this—the alcohol and sweetened beverage industries are dispatching lobbyists to Washington to fight efforts to tax their products. No matter that the new revenue would help pay for the cost of providing health care to the Americans their products sicken and kill—these folks don’t want to see their bottom lines suffer. And as Yglesias notes, the most amusing thing about good ideas like taxing things we want to discourage and the Medicare reform I mentioned earlier is that the people opposing these ideas don’t seem to have to make credible arguments. They can just go to Washington, note that they would be hurt by these policies and that they give enormous amounts of money to politicians, and go on their merry way.
Does that seem too cynical? Maybe I’d be more confident that members of Congress were actually considering ideas on the merits if those members didn’t depend on cash from the industries they regulate in order to get re-elected. The alcoholic beverage industry, for example, “tends to lobby Congress on alcohol taxes and regulations—and little else,” according to OpenSecrets. In the most recent election cycle alone, the beer, wine, and liquor industry gave nearly $11 million to Congressional candidates. If you don’t think that kind of money makes members less likely to raise taxes on beer, wine, and liquor, you are living in a dream world.
