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The Food Institute Blog

The Food Institute Blog

Can the Federal Government Preempt State Taxes on Sugary Beverages?
Posted on August 30, 2017 by Chris Campbell

If you've been reading The Food Institute Blog, you know that sugar-sweetened beverage taxes have been one of the hottest topics in the food industry over the past two years. Proponents note the potential health benefits of such taxes, while opponents argue it puts producers at an economic disadvantage and eliminates choice in the market. Despite legal challenges to sugar-sweetened beverage taxes, however, federal and state governments cannot preempt such taxes, according to a study published in the American Journal of Preventive Medicine.

To start, however, we should clarify the legal definition of "preempt." According to USLegal.com, "preemption is the rule of law that if the federal government through Congress has enacted legislation on a subject matter it shall be controlling over state laws and/or preclude the state from enacting laws on the same subject if Congress has specifically declared it has 'occupied the field.' Preemption can occur by Congress passing a law, preempting state or local law. If Congress has not clearly claimed preemption, a federal or state court may examine legislative history to determine the lawmakers' intent toward preemption." In essence, it allows a higher government entity to overrule a law created by a lower government entity.

With that definition in mind, we can turn to the study. The researchers, formed from New York University's College of Global Public Health (NYU CGPH) and the Friedman School of Nutrition Science and Policy at Tufts, reviewed existing legislative histories of federal bills and laws that preempted state taxes. According to the study, Congress historically preempted state taxes in order to ensure they did not interfere with the goals of national programs. Additionally, the federal government could prempt taxes if they were found to interfere with the proper functioning of interstate commerce. These two criteria did not apply to sugar-sweetened beverage taxes, according to the study authors.

"Preemption of public health policies, and specifically SSB taxes, undermines local control, challenges the financial stability of local governments, and extinguishes grassroots movements. SSB taxes do not interfere with federally-funded national programs or put efficient interstate activity at risk; thus, there is a dearth of legal or historic precedent to justify Congress preempting them," said Jennifer L. Pomeranz, assistant professor and interim chair, Public Health Policy and Management at NYU CGPH. "Advocates and state and local policymakers should be vigilant to preserve their powers to tax and safeguard the population's health."

"In recent work, we have identified sugar-sweetened beverage consumption as one of the leading dietary priorities for reducing diabetes, stroke and heart disease deaths among Americans. There are individual health burdens and healthcare costs associated with [sugar-sweetened beverage] consumption, with mounting related health burdens and healthcare costs for the nation. [sugar-sweetened beverage] taxes should be used as a powerful tool to save lives, raise revenue and reduce healthcare costs," said last author Renata Micha, Ph.D., research associate professor at the Friedman School.

It remains to be seen how the sugar-sweetened beverage taxes in Philadelphia, PA, Cook County, IL, Berkeley, CA, and other jurisdictions will play out. Will they drastically reduce obesity in the long-run? Will they prove to be an economic boon for the programs they are associated with? Will additional municipalities adopt their own versions of the tax? While much is uncertain, it would appear one thing is clear: this issue will be left to local governments and not the U.S. Congress.

Additional reading from The Food Institute Blog on sugar-sweetened beverage taxes:

 

Posted in Washington   Tax   Beverages  

 

About the Author

Chris Campbell
Business Writer
The Food Institute

Chris focuses on fresh, canned and frozen fruit and fresh and dried vegetables for the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He is a proud Rutgers University alumnus with a degree in English, and has a background in web writing for a variety of industries, including legal, foodservice and small-to-medium sized businesses. In his downtime you can find him watching New York Yankees baseball, hiking, enjoying live music and spending time with his dog Kaiden. He invites you to contact him via email at chris.campbell@foodinstitute.com to talk about anything food-related.

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