American Beverage Association

July 15, 2009

President Re-Commits to No Tax Hike Pledge

President Obama created a pretty clear standard on his campaign that he carried through into his presidency: that he would not raise taxes on the middle class. The President made it clear this was not simply a campaign pledge during his budget address to Congress on February 24, when he said “…if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.”

Well, there have been some in Congress talking about raising taxes on the middle class by a dime and a lot more in order to pay for health care reform. One such proposal being tossed about is a discriminatory tax on soft drinks, juice drinks, sports drinks, vitamin and smart waters and more. In fact, Rep. Allyson Schwartz, D-Pa., actually proposed taxing these products exactly one dime per can – or a 20 percent tax hike per 12 pack of soda.

The Congressional Research Service (CRS), a non-partisan entity, recently reviewed a proposal in the Senate Finance Committee of a 3-cent per can tax on these beverages and found that, when applying President Obama’s standard, 96.4 percent of the burden of the beverage tax would be borne by those making less than $250,000. And 70.6 percent of the burden would be paid by those making less than $91,297. The CRS left no doubt that this would be a highly regressive tax.

The study helped prompt a group of Democratic lawmakers from swing districts to write a letter to the House Ways and Means Chairman urging him not to pursue a tax on juice drinks and soda. The lawmakers wrote: “These taxes would most heavily impact low and middle-income Americans and create new burdens for small retailers and grocers…Taxing certain grocery items would simply increase the overall cost of groceries at the register, and reduce the amount consumers spend each week on food. As a result, consumers are just as likely to reduce expenditures on fruits and vegetables as they are to reduce expenditures on the items subject to a tax.”

Common sense. And a recognition by these lawmakers that, as leader of their party, President Obama’s pledge not to raise taxes on the middle class transcends down the political chain to members of House and the Senate from his party. After all, they all benefited from that campaign promise.

Bottom line – in this economy, people don’t want more taxes. Period. And they certainly don’t want to see taxes on their groceries increased.

So, after the President returned from overseas, he took the time Monday in a Rose Garden event to make it perfectly clear where he stands on his promise and options for paying for health care.

“And during the campaign, I promised health care reform that would control costs, expand coverage, and ensure choice. And I promised that Americans making $250,000 a year or less would not pay more in taxes. These are promises that we’re keeping as reform moves forward.” (Emphasis added.)

Thank you, Mr. President, for being a stand up guy and sticking to your commitment.

Two days later, the House Ways and Means Committee released its version of the health care reform plan. It did not include a tax on juice drinks and soda, or any other tax on middle-class life. We thank the members of this Committee for taking heed to the pain hard-working families are facing right now – and how every penny, nickel and dime adds for families in this economy.

We hope the Senate Finance Committee comes to the same conclusion that the complexities of health care reform aren’t going to be solved by a tax on soda pop.

As the economic news in this country continues to slide rather than rise, it might help to keep in mind another strong line from the President made in Denver: “In an economy like this, the last thing we should do is raise taxes on the middle class.”


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