indulgence tax

Obama and Congress are currently looking everywhere they can think of to find money to fix the budget deficit. I even heard that security has to keep chasing Joe Lieberman off of the Capital Hill lawn because he keeps trying to dig for buried treasure.[1] Since Washington seems short on good ways to close the deficit, allow me to suggest one: an indulgence tax. This would be a small tax on soft drinks and possibly junk food.

This idea is not new. Some states have the tax in place, and Democrats proposed it on a national level in 2009 as a way to help pay for their health care bill. The idea for the tax was pretty unpopular in 2009 because people claimed that it would abridge their freedom to choose what to eat. That objection is absurd.

The indulgence tax would not prevent anyone from eating/drinking their choice of food/beverages. It would just slightly alter peoples’ incentives. It would make eating healthy not only good for the body, but also relatively better for the pocketbook. Moreover, the tax would not significantly alter prices. It would be able to create substantial revenue with only minimal changes to prices. Thus, it would by no means abridge anyone’s freedom. The “freedom” argument is one that the beverage companies desperately need people to argue because the “we wouldn’t be able to make as much money by making people fat” argument sounds less convincing.

Second, taxes on alcohol and tobacco are common and quite popular. The increasing expense of cigarettes due to rising taxes is almost certainly reducing smoking and saving lives. That is a positive impact. Not many people flip out at town hall meetings about taxes on alcohol and tobacco. That is because they make sense. People recognize that even if they can smoke as much as they want, it is not that great of an idea. Yet, the same argument could be applied to soft drinks.

Third, obesity costs taxpayers a lot of money. This was true even before the new health care bill passed. It seems completely justifiable for the government to tax some of the products that make people obese, given the costs to the government due to obesity. It is notable that this argument makes indulgence taxes significantly more justifiable than taxes on tobacco. Smoking costs the government significantly less than obesity. Studies actually show that the savings to Medicare caused by people dying early from smoking-related illnesses are greater than the costs of treating those illnesses. In other words, there is little justification for taxing tobacco products because (in a somewhat perverse way) tobacco use saves the government money. However, that is not the case for obesity.

Thus, the government should use indulgence taxes to help close the deficit and encourage people to eat healthier.


[1] It is possible that I only “heard” that in the sense that I said it out loud five seconds before I typed it.

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2 Responses to indulgence tax

  1. villagebear says:

  2. Keri says:

    WHY DO YOU HATE FREEDOM!? GIVE ME BACK MY MOUNTAIN DEW!

    Signed,
    A Tea Partier

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