Legislators in the candy store

A funny NPR piece on how to define candy so that you can tax it.

The issues raised here are much more general than candy. I heard my colleague Joel Slemrod give a talk on the same basic conceptual issue but in the context of financial instruments rather than sweets. When making decisions about differential tax rates on different but related goods, the technological ease with which one good can be transformed into the other has a role to play in both how the distinct goods are defined and in the optimal tax differential between them.

Good stuff.

Via Jeff Miron