Soda Tax

Congress (or someone, I dunno) is considering taxing soda in order to fund health care reform. The amount that I have heard tossed around on Bloomberg TV is one cent per ounce, which would constitute a "15%, 20% hike in tax" (Bloomberg). According to the New England Journal of Medicine this could raise "$150 billion over the next decade" (also Bloomberg). And soda is 10% of people's daily calorie intake. Here are some questions I had:

I wonder what the elasticity of soda demand is. (Note to non-economists: elasticity is the responsiveness in your demand for a good when the price changes. I.e. if price of soda goes up by 1% how much will the quantity demanded of soda fall in percent?) If you want to maximize revenue on some tax you typically want to tax something with particularly inelastic demand. If the quantity demanded before the tax was 50 units and after a 1% tax it's 40 then obviously the government makes less money than if after the tax it's 48. That's partly why addictive things like ciggies are so nice to tax. So if soda demand is pretty elastic, meaning it responds a lot to price changes, the government won't make a lot of money on the tax. On the other hand, if soda demand is really inelastic, meaning that it doesn't respond very much to price changes, then one of the nice byproducts of the soda tax, namely that it's supposed to reduce calorie intake and therefore dampen obesity rates doesn't really happen. Trade-offs, trade-offs....

What strata of society drink most soda? Is it possible that we would end up taxing poor people more than rich people? Not that poor people couldn't use an incentive to drink less soda (if that is in fact the socio-economic stratum we are talking about.)

What about diet soda? Would that be taxed too?

Why soda? Why not chocolate or other fatty things? Maybe a compelling reason exists to tax soda. Maybe it's sugar that we want to tax, not any old calorie-delivery mechanism. But if sugar, why not cookies? Is it b/c people don't eat as many cookies as they drink soda? Is it possible that we are arbitrarily disadvantaging one industry (awwwwwww, poor Coca Cola, my heart goes out to you!) for the benefit of another?

What about substitutions? So people buy less soda and maybe substitute into similarly sugary fruit juices? It seems that it's not easy to tell that that would be any healthier.

Law of Unintended Consequences: What are some of the unintended consequences? Is this enough for e.g. Coke and Pepsi's profit margins to get squeezed to the point where they have to lay people off? What else could happen as an unintended consequence?

How do you even define soda? I mean, if you just list the current sodas, any soda company can just come up with a new one. Maybe New Coke would be back, haha. If you say, anything with so-and-so much sugar, it would include fruit juices. What about iced tea then. What about any tea with sugar. Are they going to start charging me at Little Veselka in the morning when I get my iced coffee as soon as I put sugar in it?

Finally, Isn't the healthcare number thrown around somewhere around 1 trillion? I mean, 150 billion is nothing to laugh at but it's just, you know, 15%. It's not like we'd actually fund this baby with the tax.

All in all I'm probably in favor of this. People don't really need to drink this much soda and soda is so dirt cheap, it's not going to send anyone to the poor house. I do wonder how effective you could make this and what some of the possible unintended consequences would be.