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RE: Maximizing Taxation Doesn't Maximize Tax Revenue

in #taxation7 years ago

In Philadelphia, a city near me, they instituted a tax on "sugary drinks" (sodas, sports drinks, energy drinks, etc) at the rate of $.015 per ounce. So a 24 pack of 12 ounce cans which may normally cost $6.50 would have an extra $4.32 of tax on it (plus the city adds another 6% sales tax, in addition to the state's 6% sales tax). Needless to say, it killed the retailers and opened up a black market.
Now the the coca cola and pepsi bottling plants in the city are laying off people, and the city is getting less revenue than before, and more people are out of a job.
Even a 3rd grade student could see that was going to happen, but the papers report it as an "unexpected consequence". Absolutely ridiculous.