Consumer Law & Policy Blog

Will the soda tax in Philadelphia effectively ban large containers of sugary drinks?

Remember when then-New York mayor Michael Bloomberg banned sales of sugary drinks in containers larger than 16 ounces? The idea was that the ban would cause people to drink fewer ounces of sugary drinks overall. (For Richard Posner's take on that issue, go here.)

The New York Court of Appeals ultimately threw out Bloomberg's ban on New York administrative law grounds. But will local soda taxes have a similar effect? Read Ashlee Kieler's article entitled Coca-Cola, Pepsi Will Pull 2-Liters From Philadelphia Over Soda Tax. Here's an excerpt:

The recently enacted sugary drink tax in Philadelphia has not been without controversy, including a soda industry lawsuit, unhappy consumers, and push back from lawmakers. The two biggest names in soda are now making drastic changes to the products they offer — and the people they employ — and blaming it on the tax. The Philadelphia Inquirer reports that in the face of falling sales Pepsi and Coca-Cola are removing larger containers of soda and other sugary drinks from stores and replacing them with smaller versions. The idea behind the switch is that consumers will be more willing to buy smaller containers because they come with less of a tax.

 

CFPB study: "The power of light-touch financial education: A demonstration with credit card revolvers"

From time to time, we discuss evidence about what types of consumer education and regulation (for instance, prohibitions on industry conduct vs. disclosure obligations) best protect consumers. So, I was intrigued by the Consumer Financial Protection Bureau's research study entitled The power of light-touch financial education: A demonstration with credit card revolvers. Here is the agency's summary of the study:

Can simple guidelines, or rules to live by, help consumers reduce their credit card debt? Can they be useful as a financial education tool? The Consumer Financial Protection Bureau (CFPB) commissioned a research study to test two specially developed guidelines reminding consumers to be cognizant of credit card usage. The guidelines were tested in a randomized controlled trial with a large group of consumers who carry a credit card balance month to month. The study found that exposure to one of the two financial guidelines (“Don’t swipe the small stuff”) led to lower credit card balances. Findings suggest that rules-based messages hold promise as a low-cost, scalable method of financial education.

Go here to read the full study.

Politics apparently Trumps deliberation in effort to kill ACA

According to this story by Matt Fuller, the original sponsors of the bill to "repeal and replace" the Affordable Care Act have now been cut out of the legislative process and won't know what they are voting on. And it sounds like the last-minute revisions will cause massive harm to people most in need of essential health care services. An excerpt:

Just hours before an expected Thursday vote in the House, congressional Republicans are considering massive changes to insurance coverage without even a basic idea of what those changes would mean. According to House Freedom Caucus members, the conservative group is negotiating directly with President Donald Trump and the White House on an amendment to the Republican health care bill, seemingly cutting out GOP leadership from the conversation as Speaker Paul Ryan (R-Wis.) and his deputies work to corral votes for a bill that is, in these latest provisions, a mystery even to them. The re-opening of negotiations is an admission of what has been clear all along ― that the bill as constructed by Ryan does not have the votes to pass on Thursday. It also represents a major reorganization of a significant chunk of the American economy in a matter of hours.Conservatives are using their considerable leverage on the measure ― the Freedom Caucus has demonstrated it has the votes to sink the legislation ― to extract concessions on the Essential Health Benefits section of the bill, which mandates that insurers offer plans covering 10 services: outpatient care, emergency room visits, hospitalization, maternity and newborn care, mental health and addiction treatment, prescription drugs, rehabilitative services, lab services, preventive care and pediatric services.

 

More on the House Hearing on the CFPB's Constitutionality

Brian posted yesterday about the House hearing. For those who don't want to listen to the recording, you can find reports in the St. Louis Post-Dispatch (Rep. Ann Wagner takes aim at consumer protection chief), Housing Wire (Tensions escalate at House hearing on constitutionality of the CFPB), Money (This Lawmaker Just Gave the Perfect Defense of a Consumer Watchdog the GOP Is Trying to Kill), Morning Consult (CFPB Opponents Suggest Trump Could Use DOJ to Justify Firing Cordray), and CFPB Monitor (Process vs. Outcomes Debated at Hearing on Constitutionality of CFPB Structure). As the headlines suggest, the reports offer quite a range of perspectives on the heaing. Here's an excerpt from the Housing Wire story:

Well, this is awkward.

Four witnesses on the "constitutionality" of the Consumer Financial Protection Bureau sat before a House subcommittee on Tuesday morning, lending their expert knowledge to help sort through the current state of confusion around the bureau. 

* * *

But instead of providing their expertise on the CFPB and its constitutionality, the four witnesses were tossed around between House Republicans who profusely thanked them for coming and House Democrats who condemned the hearing entirely.  

Who gains and who loses under the Affordable Care Act replacement?

An Urban Institute report issued today on the "American Health Care Act" finds that, "taking both tax reductions and benefit reductions into account, the average high-income family would be significantly better off and the average low-income family would be significantly worse off under the AHCA."

Specifically, under the bill, "[t]he average family with less than $10,000 of income in 2022 would be $1,420 worse off, a net reduction of more than 30 percent of the family’s income. The average family with more than $200,000 of income in 2022 would be $5,640 better off, a net increase of 1.1 percent of the family’s income."

The full report is available here.

Will taxes on sugar-sweetened beverages benefit health?

Law prof Lawrence Gostin says preliminary evidence suggests that they will in 2016: The Year of the Soda Tax. Here's the abstract:

The year 2016 was pivotal in the history of the “soda wars” – the politically divisive conflict between soda as a joy of life or as a uniquely harmful food. This past year, the soft beverage industry lost its battle against soda taxes. At the beginning of 2016, only 121,000 Americans, residents of Berkeley, California, paid public health based taxes on sugary drinks. Throughout the year, six cities and counties followed suit, and when these new measures take effect, that number is predicted to grow to more than 8.3 million nationally. Evidence from early adopters shows great promise. Mexico’s 1-peso-per-liter tax produced a 6% average decline in purchases during its first year, reaching 12% by December. In Berkeley, California, consumption of sugary beverages in low-income neighborhoods decreased by 21%.

Soda taxes are an innovative method of reducing consumption of added sugars, which increase risk of obesity, type 2 diabetes, and other noncommunicable diseases. Taxes aim to discourage consumption of sugary drinks by raising prices, and offer the dual benefit of generating revenue, which can be used to fund other public health and community programs. Not surprisingly, “Big Soda” has unleashed well-coordinated, heavily resourced opposition campaigns against soda taxes, including lobbying and litigation. The successes of 2016 show that local governments can overcome industry opposition and provide leadership and innovation in tackling rising rates of obesity and noncommunicable diseases. Now, faced with an administration that has offered few (if any) reasons to be optimistic about disease prevention and health promotion at the federal level, local leaders and public health advocates should consider soda taxes as a key pillar of obesity prevention.

 

Hackers threaten to wipe iPhones

Consumerist reports that a hacker group claims to unprecedented access to iPhones and is threatening to remotely wipe them clean if Apple doesn’t pay a ransom.

Motherboard reports that the group of hackers — known as the Turkish Crime Family — allegedly gained access to a list of between 300 million and 559 million iCloud and Apple email accounts and plan to delete the associated devices on April 7.

That is unless Apple pays it $75,000 in crypto-currency or $100,000 worth of iTunes gift cards. If that happens, the hackers say they will simply delete the list.

An exchange between the group of hackers and Apple security team members has been ongoing for at least a week ....

In one email a security team member asks for a sample of the hacker’s list. In another, the hackers claim they have 300 million emails, while yet another claims the list contains 559 accounts.

The full Consumerist story is here.

House Financial Services Committee holds hearing entitled "The Bureau of Consumer Financial Protection’s Unconstitutional Design"

Go here to view the witnesses' written testimony. (The witnesses were Ted Olson, Saikrishna Prakash, Adam White, and Brianne Gorod.) To watch the hearing, click here or on the embedded video below.

 

 

Congress's power to obtain, review, and disclose Trump's (and other tax filers') tax returns

Law prof George Yin has written a brief and timely paper called Congressional Authority to Obtain and Release Tax Returns. Yin is the former chief of staff of Congress's Joint Committee on Taxation.

In his paper, Yin explains that particular congressional committees possess the power to obtain, review, and disclose filers' tax returns in limited circumstances and that, in Trump's case, the committees should exercise at least their obtain-and-review authority:

In the present situation, concerns over President Trump’s possible conflicts of interest — including conflicts with tax legislation the committees may soon be asked to approve — would certainly seem to justify a tax committee effort to obtain and inspect his confidential tax information. A review could also assure the American public that the IRS is treating him like any other taxpayer and not giving him preferential treatment. ... Whether there should be disclosure of any information obtained is a separate question. There must also be a legitimate purpose for any disclosure. Once the tax committees complete their investigation, they can determine whether any disclosure to the public would be appropriate.

Here is the abstract of Yin's paper:

President Trump's continuing refusal to release his tax returns despite the contrary common practice of presidents over the last 40 years has spurred interest in finding alternative ways to obtain the information. This article describes the authority of the tax committees in Congress to obtain, inspect, and disclose the confidential tax information of any taxpayer, including the president, without the taxpayer's consent.

Should administrative rule makers take account of moral obligations and, if so, how?

That's the topic of Moral Commitments in Cost-Benefit Analysis by law profs Eric Posner and Cass Sunstein. Here is the abstract:

The regulatory state has become a cost-benefit state, in the sense that under prevailing executive orders, agencies must catalogue the costs and benefits of regulations before issuing them, and in general, must show that their benefits justify their costs. Agencies have well-established tools for valuing risks to health, safety, and the environment. Sometimes, however, regulations are designed to protect moral values, and agencies struggle to quantify those values; on important occasions, they ignore them. That is a mistake. People may care deeply about such values, and they suffer a welfare loss when moral values are compromised. If so, the best way to measure that loss is through eliciting private willingness to pay. Of course it is true that some moral commitments cannot be counted in cost-benefit analysis, because the law rules them off-limits. It is also true that the principal reason to protect moral values is not to prevent welfare losses to those who care about them. But from the welfarist standpoint, those losses matter, and they might turn out to be very large. Agencies should take them into account. If they fail to do so, they might well be acting arbitrarily and hence in violation of the Administrative Procedure Act. These claims bear on a wide variety of issues, including protection of foreigners, of children, of rape victims, of future generations, and of animals.