Money Wars: States Battle Local Governments Over Food Taxes

P. Gardner Goldsmith | August 3, 2018

Rarely, and only through great expense, can a target of government tax thievery effect change on a political level.

After all, governments need your money to exist. And they claim the statutory power to take it. So it’s interesting to see how, right now, some money-hungry states and some money-hungry cities within them are battling over what kinds of tax cash the cities will take. Specifically, they are battling over food taxes, and are showing us what happens when the carnivorous government wolves fight each other over the flesh of the sheep.

As Bayleen Linniken reports for Reason, numerous states are responding to the obnoxious food and beverage taxes many cities have imposed on their local vendors, and the responses aren’t sitting well with local politicians hungry for their own kind of food: tax cash.

Of all states, hard-left California in June shut down any further municipal food or beverage taxes, allowing some old “soda taxes” to continue picking consumer pockets, but prohibiting new ones on food or drink until 2031.

Michigan passed similar legislation in 2017, and Arizona passed a ban on further food and bevvy taxes in March.

Even going back to 2013, Mississippi passed SB 2687, what some state politicians called the “Anti-Bloomberg Bill”, referencing His Lordship, former NY City Mayor Michael Bloomberg’s, Quixotic and feudalistic campaign to ban sodas of a size he didn’t like. Not only did the Mississippi bill ban local soda taxes, it also banned local municipalities from forcing food vendors to have to post the nutritional and caloric content of their food. Vendors could if they wanted to, but it would not be required. The municipalities were also prohibited from conditioning “any license, permit, or regulatory approval for a food service operation upon the existence or nonexistence of food-based health disparities.”

Which lets a lot of food vendors breathe easier as they work hard to beat competition at the never-ending game of pleasing customers.

Of course, some people might balk at these state initiatives, perhaps seeing them as bigger governments overpowering the small. But the right of the individual (be he a business owner or a consumer) to be free from government threats and theft is paramount, and takes precedent over the idea of “small government being trampled upon by large.” In fact, the fear that smaller governments might trample on individual rights was one of James Madison’s primary reasons for backing the US Constitution and its more centralizing authority compared to the Articles of Confederation. Madison later changed his tune, admitting that the federal government under the Constitution was, to paraphrase, a monster, that the “interstate commerce” clause of it was being used to grant the feds all kinds of powers not envisioned by many of the Founders, and that, generally, large governments are usually more oppressive than smaller ones, from which it is easier for taxpayers to escape, but the lesson certainly applies here.

In fact, the only state where the trend is not moving against the municipal money-grabbers is Pennsylvania, where, Linniken notes:

Last week, Pennsylvania's highest court upheld the legality of Philadelphia's soda tax after a court challenge. Some believe the win by Philadelphia could embolden other cities in the state and around the country to pass new taxes.

It is certainly a sad and strange turn of events to see a city like Philly, so deeply entrenched in the history of the American revolution, endeavoring to keep a tax on its people that’s even worse than Britain’s Tea Act of 1773, an act that saw arbitrary inspections (hence the creation of the Fourth Amendment), shipments of suspected scofflaws to Nova Scotia for trial in order to avoid juries nullifying the law, and, in response, the Boston Tea Party, conducted by those swarthy Sons of Liberty.

But it’s encouraging to see state legislatures swatting down the tax moves by other cities. In fact, Linniken notes, there may be even more:

In November, for example, Oregon voters will decide whether to preempt local food taxes in that state. In Washington State, where I live, state lawmakers, consumers, and business interests have responded to Seattle's recently adopted soda tax by pushing a ballot measure, Initiative 1634, that would preempt local governments from adopting food or beverage taxes but which would, like the California law, leave existing food taxes in place.

The only trouble is that many of these states have their own food and beverage taxes. Washington State has taxes on “junk food”, prepared food, sodas, and dietary supplements. Mississippi taxes grocery items. California taxes food eaten inside a restaurant or “eatery”, while take-away is not taxed. And Michigan taxes food prepared in supermarkets (among many, many other things).

One of the great lessons students of political-economics can learn is the stark difference between private business and the state. Both need money to exist, but private businesses claim no power to take your money for their products or services. If they don’t please consumers, they suffer, and consumer resources are freely spent elsewhere. In order to pay their bureaucrats and politicians, their armed police, and their judges, governments don’t ask, they assume the power to take your money whether you are satisfied or not.

So seeing the wolves fight each other might be nice, but we must remember that they are the predators, and we, the prey.

We always wait to see the size and weight of the flesh they tear from our hides.