By DAVID MOON, Moon Capital Management
Think about your kitchen; it is one of the most exciting rooms in your
house. All those exciting flavors and textures…a well-stocked kitchen can
be the source of some of the most exciting and pleasurable parts of your life.
That is, unless you live in California.
California senator, Deborah Ortiz, introduced a bill that would impose a “sin
tax” on soft drinks. She wants to discourage obesity. The proceeds
of the tax would be used for medical care and to bribe schools to remove soft
drink vending machines. Senator Ortiz, whose family has a history of
diabetes, does not intend to levy the tax on diet drinks or (my favorite) V-8;
she only wants to tax the evil caramel-colored, sugar water beverages.
Two years ago, I wrote of the dangerous precedent set by the state tobacco
settlement with the cigarette companies. Most people (like me) do not
smoke cigarettes, so it is easy for us to ignore an additional tax on a pack of
smokes. It is easy to allow the government to demonize some minority group
(like smokers), as long as you aren’t a member of that group.
This is still a philosophical discussion for me; I am one of the few people
in the world who has never consumed a Coke or Pepsi. (Although I do not
smoke or drink colas, my personal vice is already well-regulated and heavily
taxed.) I have no idea what a New Coke, Coca-Cola Classic or Pepsi taste
like. For years, however, I have wondered why the government can justify
picking on the tobacco industry for the medical costs created by the legal use
of its product, while ignoring the heart disease resulting from the use of fried
cheese in the growing sprawl of America’s fern bars. Why not sue
automobile manufactures for the costs associated with drunk driving? (Of
course, taken to its extreme, a litigious society might choose to sue its school
systems for producing twelfth grade graduates who are so stupid as to make
horrible life decisions, but that exercise would be just the taxpayer suing
himself. Sort of like the Knox County Commission and School Board.)
When I think about the budget problem in the state of Tennessee, it is easy for
me to favor taxes on cigarettes, soft drinks and broccoli; I don’t like any of
Too many elected officials decide to serve as nanny for the collective
society. I do not give my children colas. Neither do I give them
cigarettes or fully functioning nuclear weapons. To my knowledge, there is
no law that prohibits me from taking my son into the woods (outside the city
limits) on a clear Saturday morning and nuking a few squirrels. I reached
this decision without any coercion (either via the tax or criminal code) from
For years, the states were complicit partners with the tobacco industry,
profiting billions of dollars from annual cigarette taxes. Several years
ago, most of these taxing authorities decided they would like to more fully
participate in the profitability of this industry; they negotiated an additional
profit sharing component to their partnership with the tobacco companies.
Most citizens did not complain, because most people do not smoke. But when
a society freely surrenders the rights of its minority citizens (such as
smokers), it reduces the rights of all of its citizens. How much
difference is there between government discouraging the consumption of certain
beverages and discouraging the consumption of certain books? Do not be
quick to dismiss this possibility; who would have ever imagined a punitive
surtax on Dr. Pepper?
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).