It doesn't need to be globally prohibitive, it just needs to be sufficiently prohibitive as to curb majority use of the target. And usually the things that make the most use of the target is disproportionately affected by thin increases in cost.
eg if k-cups cost 2c to produce in plastic, and tax raises that cost to 5c, and margins were at 4c so now 1c, then it makes sense to start looking at alternative materials/strategies that weren't previously cost-effective.
At the same time, auto using a good deal of plastic per car, but much higher margins, and much less plastic use across the total market, might have their costs raised by $200 in total per car by the same tax; but if they had a $5k margin now dropped to $4.8k, they probably don't need to change much (they're still affected, but not nearly as bad).
The problem with plastic is that its cheap, so it can easily fit in disposable markets, but we really don't want it there, and disposable markets tend to have razor-thin margins. Ofc the strategy I just described might not actually affect K-cups: K-cups are really the only thing I can think of where plastic got added to make it a luxury product, rather than removed (cars otoh are luxury despite the plastic). And being a luxury product, it's probably got decent margins and can eat small tax increases.
But you can probably get 90% of the way there with minor taxes. And ofc you'll still have necessary usage for certain things (lets say, emergency shelters), but you can avoid adding loopholes to plastic by lowering less tax-burdens on other aspects of the target industry, which might be less viable/harmful to abuse.
setr|7 years ago
eg if k-cups cost 2c to produce in plastic, and tax raises that cost to 5c, and margins were at 4c so now 1c, then it makes sense to start looking at alternative materials/strategies that weren't previously cost-effective.
At the same time, auto using a good deal of plastic per car, but much higher margins, and much less plastic use across the total market, might have their costs raised by $200 in total per car by the same tax; but if they had a $5k margin now dropped to $4.8k, they probably don't need to change much (they're still affected, but not nearly as bad).
The problem with plastic is that its cheap, so it can easily fit in disposable markets, but we really don't want it there, and disposable markets tend to have razor-thin margins. Ofc the strategy I just described might not actually affect K-cups: K-cups are really the only thing I can think of where plastic got added to make it a luxury product, rather than removed (cars otoh are luxury despite the plastic). And being a luxury product, it's probably got decent margins and can eat small tax increases.
But you can probably get 90% of the way there with minor taxes. And ofc you'll still have necessary usage for certain things (lets say, emergency shelters), but you can avoid adding loopholes to plastic by lowering less tax-burdens on other aspects of the target industry, which might be less viable/harmful to abuse.
nikanj|7 years ago