Regressive Taxes & Plastic Bags

An article from the Albuquerque Journal popped up several times in my news feed this week. (See the article HERE) As many know, in 2014, the City of Santa Fe, imposed a ban on plastic shopping bags. In the original ordinance, there was a provision that required stores to charge customers 10-cents a bag, for paper shopping bags. The idea behind this was to force encourage people to start using cloth bags. As it turned out the City Attorney said that charge amounted to an illegal tax, and had to be removed. So, because of this legal technicality, Santa Fe's bag ban has been largely unsuccessful. Having shopped several times in Santa Fe during 2014 I can say that the ban is not working.

(Sidebar here: we decided to vote with our dollars when the ban went into effect in Santa Fe, because we felt it was intrusive and burdensome. For the most part we have stayed away, and have not missed it. The times when we have gone there to shop, it's been wretched. Partly because it's always wretched there, but mostly because forcing someone to shop a certain way is wrong.)
 
As I've stood near the exit doors of Target and Walmart, in Santa Fe, customer after customer has left with their purchases in paper shopping bags. Here is the thing, the people that forced this ordinance on Santa Fe were the people who were bringing their own bags in the first place. Why do the feel they need to force their economic and lifestyle choices on others? 

It's also important to note that in Santa Fe there is a real economic dichotomy. There are the wealthy, elites, who run the city. I call them "The Plaza People" because they can afford to shop and eat on, or around the Plaza area in downtown Santa Fe -- which a very expensive proposition. And then there is the rest of the city, which is made up of a considerable number of poor working class people, and Hispanic people who are immigrants of some sort who make barely enough to live on (legal or illegal is irrelevant for this discussion). Those are the people that the bag ban has hit the hardest and impacted the most.

 

Let's turn our attention back to the 10-cents per bag fee that was there and then taken away. This fee is a regressive tax. If you look on Wikipedia for a definition of regressive tax you get the following:

"A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. "Regressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, so that the average tax rate exceeds the marginal tax rate. In terms of individual income and wealth, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer's ability to pay as measured by assets, consumption, or income. These taxes tend to reduce the tax incidence of people with higher ability-to-pay, as they shift the incidence disproportionately to those with lower ability-to-pay."

For those of us who do not speak tax-collector, a regressive tax is a tax which has a higher impact on people that can least afford to pay.  The less money you have to spend, the higher tax rate or assessment you will have.  This is an inverse relationship.  In other words, poor people pay more.  The 10-cent per bag fee was a regressive tax.

Activists in Santa Fe are trying to find a loop hole around the illegal tax issue for their bag ban. It will be interesting to see if they manage to think something up.

In the mean time, it's good to remember that it should be your choice how you carry your groceries home. If you want to bring a cloth bag, great! If you want to use the plastic or paper bags from the store, that's great too. Governments and special interest groups should not be manipulating behavior. I don't know about you, but just the thought of that has a very eerie, 1984 vibe to it. No thanks!