In a blog post titled Taxing Junk Food Jacob Goldin of Tax Vox Blog said this about the proposal to tax unhealthy foods:
Like other sin taxes, a tax on junk foods would be regressive. That is, it would disproportionately affect low-income families who consume a greater share of those goods. However, this story may not be so clear-cut. Several studies have found that low-income households are especially sensitive to changes in the price of unhealthy foods, suggesting they will avoid much of the tax (and the financial hit) by reducing junk food purchases.
Moreover, low-income communities are among the most affected by obesity-related diseases such as Type II diabetes and heart disease. If a junk food tax helped change that pattern while also providing revenue to improve access to health insurance, its net effect could be extremely progressive (Len Burman has made a similar point in the context of a VAT).
As Goldin points out, some people are opposed to a tax on bad foods on the grounds that it would fall disproportionately on the poor.
I oppose sin taxes, but not for this reason. In fact, for me this is a factor weighing in their favor.
If the purpose of the tax is to make people stop engaging in conduct that is detrimental to them, doesn’t it follow that we would want to threaten the obese poor with the tax so they take better care of themselves.
Aren’t we doing them a service by taxing them? Wouldn’t we be saving their lives?
But if the true purpose of the junk food tax is to raise revenue then it’s understandable why its proponents might be concerned about its regressivity. You see, they don’t really expect the threat of the tax to change peoples’ behavior at all.
Instead, what they want is more government revenue and a sin tax seems like a politically palatable way to generate it.
Finally, it seems obvious to me that an obese poor guy would be more likely than a fat rich guy to change his behavior to save a few hundred dollars a year?
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7 responses so far ↓
1 Bob Jamison // Jul 24, 2009 at 9:46 am
“Obese poor” Why is it that the US is the only country in the world in which the “poor” are obese?
2 Peter // Jul 24, 2009 at 3:21 pm
Bob,
Thanks for visiting.
I’m no nutritionist, but I think it’s an issue of the quality of what is eaten rather than the quantity.
Poor people are more likely than rich and educated people to eat foods that are high in fat and simple carbohydrates.
Still, it is rather disconcerting to see extremely obese mothers carting around their shoeless children.
3 Bob Jamison // Jul 24, 2009 at 4:39 pm
You are absolutley correct about why people in general are overweight: They eat too much and too often eat the wrong thing. A person becomes overweight by consuming more calories than they use.
The real question is, if they are truly poor, how do they have enough money to buy enough food to consume more calories than they need?
PS: This is a great site. I visit daily and appreciate your comments and observations.
4 Peter // Jul 24, 2009 at 10:01 pm
Thanks Bob. I appreciate it.
5 Botax? // Jul 28, 2009 at 6:02 am
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7 Tax Piranha // Sep 18, 2009 at 2:46 am
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