First the Cigs.. NOW, introducing The Junk Food Tax

The Junk Food Tax: Good for Our Health or Bad for Our Wealth?
[link to jacobrheuban.com]
Last month New York Governor David Paterson proposed an obesity tax to be levied on fattening foods. He characterizes America’s problem with obesity as a crisis. Drawing a comparison to cigarettes, he suggests that just as cigarette taxes reduced the number of American’s consumption of cigarettes, a tax on certain junk foods should reduce the consumption of unhealthy fare.

Paterson remarked:

“Just as the cigarette tax has helped reduce the number of smokers and smoking-related deaths, a tax on highly caloric, non-nutritional beverages can help reduce the prevalence of obesity”[1]

While Patterson’s proposal focuses on sodas and other sugary drinks, the general concept of taxing foods that are detrimental to health is interesting.
“Obesity Tax”: A name destined for disapproval

I am not sure who came up with the term “obesity tax”, or the even worse term “fat tax”. I haven’t yet read about those words coming out of Paterson’s mouth. It’s a terrible name that is destined to only increase resistance to a tax that is already likely to have a large group of adversaries. Calling this an “obesity tax” is akin to calling the tax on cigarettes a “lung cancer tax”. It’s never good to sound like you are taxing people’s problems (in this case obesity). But taxing the cause of their problems (in this case junk foods) seems to be more palatable, and in this case also more accurate.

Additionally, to some extent, the term “obese” describes a category of people, mainly those suffering from obesity. An “obesity tax” sounds like it unfairly singles out those people for taxation. It also stigmatizes that group in a way that is unacceptable.

The fact is that Paterson has expressed no intention of taxing people who suffer from obesity. He intends to tax the sales of certain unhealthy foods regardless of the body type and health of the person who purchases them. The term “obesity tax” has the ring of a term coined by someone who intended to rile the reader. A more accurate, although somewhat less dramatic sounding term, would be “junk food tax” or “unhealthy food tax”.
Why tax junk food?

Setting aside phraseology, the question remains about whether these foods should be taxed. Generally, the arguments in favor of taxing these types of foods are:

1. The tax creates a deterrent to the consumption of unhealthy foods leading to (1) healthier people and (2) reduced burden on our health care system from treating the adverse results of the consumption of unhealthy foods.
2. The tax will generate revenues that can be used to combat the so called “obesity crisis”, including education and treatment.

The proposed tax on unhealthy foods is an attempt to, through taxation, regulate self destructive behavior. This is not dissimilar from the tax on cigarettes. And there is evidence that cigarette taxes have reduced cigarette consumption. A recent article in BusinessWeek makes a stark comparison:

“Obesity is now closing in on smoking as the leading cause of preventable death in the U.S. But unlike obesity, smoking rates have been declining since 1964, when 42% of American adults smoked. In November, the CDC reported that the U.S. smoking rate had dipped below 20% for the first time on record, and public health experts give much of the credit for that decline to extremely high taxes enacted over the last 15 years on tobacco products.”[2]

Should the government regulate self destructive eating habits?

As Americans we generally believe that we should have the freedom to choose to partake in certain pleasures in life, even if there is a danger associated with the activity. After all, so many of the activities that we enjoy carry some calculated risk. Past times like playing football, riding motorcycles or SCUBA diving all carry some measured risk and we aren’t about to start taxing or regulating participation in those activities. Similarly, being sexually promiscuous in this day and age carries well known risks. While considerable effort is made to educate people about those risks, legislators are not about to regulate or tax the sexual exploits of consenting adults.

However, we have for some time accepted many form of behavioral regulation of citizens including the tax on cigarettes, restrictions on the sale of alcohol and laws requiring the use of seat belts in cars and helmets on motorcycles. These are all laws that aim, to varying extents, to regulate what is perceived as self destructive behavior. The quintessential example of laws that regulate behavior deemed to be self destructive are drug laws. It would be natural to respond to the above comparison with a bit of trepidation. In our society there is a big difference between the perceived harm caused by the consumption of a Big Mac versus that of heroine. But while there is a qualitative difference in the riskiness of the regulated behaviors[3], there is a categorical similarity between these laws in that they both regulate self destructive behavior.

Readers may recognize the above discussion as leading to a slippery slope argument. If obesity taxes are instituted, then where do we draw the line about what can be taxed or regulated? Should the tax apply to only the unhealthiest junk food? Or should it apply to anything but components of the healthiest diet? And if a tax on unhealthy food is ok, why not a tax on other risky behavior like sky diving? Where is the line drawn?

Alternatively, we have already accepted that the regulation of unhealthy behavior is acceptable in the form of taxes on cigarettes, restrictions on the sale of alcohol and of course the drug regulation[4]. In what way is a tax on the sale of unhealthy foods categorically different from the above legislations?

Is there a clear distinction between over consumption of junk foods and other regulated self destructive behaviors? Does the danger of junk food consumption rise to some threshold level making it appropriate subject matter for legislation? Some data from the Office of the Surgeon General may help to illuminate the seriousness of the dangers of unhealthy eating habits[5]:

* Overweight and obesity result from an imbalance involving excessive calorie consumption and/or inadequate physical activity.
* 61% of adults in the United States were overweight or obese (BMI > 25)* in 1999.
* 300,000 deaths each year in the United States are associated with obesity.
* The economic cost of obesity in the United States was about $117 billion in 2000.

Last Edited by theDtrain on 10/13/2011 04:27 PM