Frontline Dems want food tax nixed

Electorally vulnerable Democrats are urging the House Ways and Means Committee to drop language from its healthcare reform proposal that would tax food and beverage products, saying it would disproportionately impact the poor.

In a letter to committee chairman Charlie Rangel (D-N.Y.) and ranking member Dave Camp (R-Mich.), 13 members of the Democratic Congressional Campaign Committee's Frontline program, led by Reps. Debbie Halvorson (Ill.), John Adler (N.J.), Michael McMahon (N.Y.) and Ann Kirkpatrick (Ariz.), urge the committee to abandon proposed taxes on food.

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One proposal would tax sugary sodas at a rate of 10 cents per can, which could generate $112 billion, according to estimates.

"This is terrible tax policy to go after [a] very specific, almost laser-like focus that isn't across the board," McMahon told The Hill on Friday. "It's bad for the people because it's regressive, and the small-store owners and small-business owners would be impacted as well."

The Democrats, all freshmen except Rep. Leonard Boswell (Iowa), say such a tax would hit poorer families hardest. According to an assessment by the Congressional Research Service, 70 percent of the money generated from a soda tax would hit those making under $92,000 a year.

And, the Democrats said, adding taxes to certain food items and not others would raise the cost of groceries; poorer Americans spend more of their money on food than wealthier families.

"Taxing certain grocery items would simply increase the overall cost of groceries at the register, and reduce the amount consumers spend each week on food," the Democrats wrote. "As a result, consumers are just as likely to reduce expenditures on fruits and vegetables as they are to reduce expenditures on items subject to a tax."

"While we support health care reform and finding appropriate offsets, we would prefer that health care legislation does not raise taxes on middle class families and small businesses," the members wrote.

McMahon said the freshmen signatories, in their weekly meeting with House Speaker Nancy Pelosi (D-Calif.), "got the sense that we'd been heard and that they are discussing it further."

Republicans could use the tax on sodas and any other food product to claim Democrats are abandoning a White House pledge not to raise taxes on those making less than $200,000 a year.

GOP sources say the party, coming off what they see as a successful effort to brand cap-and-trade legislation as a national energy tax, will begin hammering Democrats for backing a small-business tax -- their phrase for a proposed surtax of three percent on those making over $200,000 a year, or a couple making more than $250,000 a year.

McMahon said the healthcare bill will not be as easy to brand as a tax on small businesses, given that the goal is to reduce costs for those very businesses.

"The healthcare bill seeks to alleviate costs to small businesses, and as a former small-business owner I can tell you that in the last decade the highest increase in cost was healthcare for our employees," he said.

But, he cautioned: "Our country has a long history of opposition to taxes unless necessary, and we are mindful of that."

Those who signed the letter include some of Republicans' top targets heading into the 2010 cycle. The GOP already has top recruits set to run against Reps. Walt Minnick (D-Idaho), Frank Kratovil (D-Md.) and Betsy Markey (D-Colo.), while Reps. Tom Perriello (D-Va.), Eric Massa (D-N.Y.) and John Boccieri (D-Ohio) could also face tough contests.

Rep. Michael Arcuri (D-N.Y.), who faced a surprisingly close race in 2008, and Rep. Martin Heinrich (D-N.M.) also signed the letter.