Impact of Targeted Beverage Taxes on Higher- and Lower-Income Households

A sugar-sweetened beverage tax would affect the waistline and wallet of middle-income households more than that of those in low-income and high income brackets.

Carbonated and other sugar-sweetened beverages (SSBs) increasingly are being targeted for taxing as a way to reduce consumption and help stem rising obesity rates. Even proponents of such a tax have concerns, though. While a 20 percent tax would result in a projected 15.8 percent decrease in consumption, there is no guarantee that consumers would not switch from sugary drinks to equally caloric foods or beverages. They also are concerned about whether such a tax would disproportionately affect lower-income households.

Researchers analyzed data from the 2006 Nielsen Homescan panel of nationally representative households that scan and transmit data on their store-bought food and beverages for a year. They looked at purchase records for seven beverage categories and predicted how consumption might change with four tax scenarios: a 20 percent tax on carbonated beverages; a 20 percent tax on all SSBs; a 40 percent tax on carbonated beverages; and a 40 percent tax on all SSBs.

People from the lowest quartile income group purchased more SSBs than those with higher incomes, but did so at a lower average price than other households and their share of a tax would be less than that of higher income households. While daily calorie consumption was reduced with all tax scenarios, middle income households had the highest estimates in SSB calorie reduction from a tax.