Food is Sin

By Ocean in Articles, Featured, Taxes

A recent article in the Economist sheds light on the proposed taxes on Junk food. As free market enthusiasts, we have problems with sin taxes in general. On the other hand, we don’t believe junk food even falls under that status.

Sin taxes, or Pigouvian taxes, are taxes levied on certain goods and activities whose social costs are not reflected merely in the goods or activities themselves. In other words, a cigarette costs money to produce and distribute, which is reflected in the cost. However, an extra tax is levied on it by the government. This tax (at least theoretically) is not levied just to force smokers to quit, but in order to help pay for the social costs, ie. cancer rates for people in the immediate vicinity of smokers. The same argument can be made for alcohol and gambling. It is a stretch to say the same about junk food.

The main premise for this is that people who eat more junk food raise medical and insurance costs for everyone. Although this would seem like more cause for medical insurance reform (Whaddya know?) than anything else, it also is not entirely accurate. Many people eat junk food regularly, yet are in good shape. They may exercise regularly, have a sturdier metabolism, or any other variety of reasons. By the same token, many people may not have visited a fast food parlor in years and still be obese and unhealthy. Of course, if you follow this train of logic (as The Economist mentions) you wind up with a tax on calories, where fat people pay more than thin. It is very unlikely that any politician who values his or her career would promote this. Another problem is that a junk food tax winds up being regressive, since poorer people tend to eat more of it than the rich in the United States.

Our conclusion? A fat tax, like any other tax, can have unintended consequences. Whether junk food is addictive, or obesity is a disease, are all arguments for other forums. We believe these argument should be made and proven before adding more taxes to the populace; the main reason being that we don’t think they will curb obesity at all which, presumably, is our long term goal.