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Bagel Tax Distortion  DESCRIPTIONTony Cenicola/The New York
Times  Besides questions of fairness, the classic reason why
economists are skeptical of taxes is that taxes distort
behavior.  In some cases, taxes can distort behavior in ways
that are considered socially beneficial. Energy taxes, for
example, make driving more expensive, and so can potentially
reduce carbon emissions. Taxes intended to correct for these
kinds of negative externalities are known as Pigouvian taxes.
Other taxes, however, distort behavior in more harmful, or at
least arbitrary, ways. Income taxes, for example, can discourage
people from working because they reduce the potential reward
obtained from working.  Likewise sales taxes can shift behavior
in unintended ways, especially if they are not applied uniformly
across all goods and their close substitutes. Take for example
the New York sliced-bagel tax:    And while sliced bagels are
subject to sales tax, a sliced loaf of