Taxing Junk Food
One proposal to help finance health reform would tax fast food, salty snacks, and/or sugary drinks like soda. While critics see government meddling in citizens’ private lives, supporters of a “junk food” tax say such a levy could help finance expanded insurance coverage as well as lower health care costs by inducing people to switch to healthier diets. Taxpayers pay much of the expense of obesity-related disease through Medicare and Medicaid.
Would a junk food tax really reduce obesity? Economic theory says that by raising the relative price of unhealthy foods that contribute to obesity, the tax would motivate people to spend more of their income on foods that are healthy. As consumers abandon costlier junk foods, obesity rates would fall, and so would health care costs. At least that’s the theory.
In practice, a lot would depend on how the tax is designed. For example, a tax on chips could result in people choosing to buy more cookies for their afternoon snack. Similarly, a tax on soda might lead people to drink more beer. For a tax to be effective at reducing obesity, consumers must not respond by switching to other unhealthy foods not covered by the tax.
Lisa M. Powell and Frank J. Chaloupka recently combed the literature to find out what we know about how junk food taxes affect obesity. Their answer: not much. Most studies have concluded that changes in the price of unhealthy foods have relatively small effects on obesity rates, although one found that residents of states that repealed junk food taxes were more likely to experience subsequent obesity gains. Powell and Chaloupka concluded that it would probably require a “nontrivial” change in prices to significantly affect obesity rates. In other words, it would take a heavy tax to keep the weight off.
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).
A final stumbling block lies in defining junk food. Are high-calorie sports drinks junk foods or useful exercise aids? What makes a sugary drink healthy enough to avoid the tax? Do O.J. and apple juice make the cut? The
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Well junk food really is junk .. food , and is has so many chemicals and do not give the body anything it needs except toxins , so get on a HCG diet and stop eating anything but natural foods.
I think the problem here is that the families that eat the most junkfood are low income families. Junkfood is cheap. If you tax it heavily, who gets hit financially? The poor people.
that wouldnt help the people that have obesity becaause they would still buy their junk food and the rest of the world might buy the tax free healthy stuff but that will also lose the government money!
Instead of raising or adding taxes to junk food, make all natural and healthy foods tax-free.
I don’t think it is a good idea to tax junk food. People should be allowed to do what they want with their bodies. Junk food every once in a while won’t hurt you; it doesn’t seem fair. Why do we have to let the government interfere in everything? In fact, I recently read a book called Mean Martin Manning in which the government forces a man to “better” himself by being more social, eating the “right” foods, etc., when all he wants is to be left alone. I think we all have the right to make our own decisions. If people want unhealthy food, so be it. It’s their choice. If the government wants people to be healthy then they should create incentives for people to eat right, not punishments for those who don’t.
Taxing junk food is no answer.People that work produce that junk food,what happens when they no longer need those people to produce so called junk food unemployment goes up,stress,health problems you are not fixing the problem just adding to it.The government should really find other ways of health reform instead of taxing peoples livelihood.Do health problems really go away when you take smoking,drinking,junk food,etc.Healthy lifestyle is a choice Please let be the ones to choose not our government
A regressive tax on junk food might actually stop it from being consumed. This goes to the question of sin taxes that I believe we had here earlier, although I might have engaged in it somewhere else. Ideally, the sin tax would provide remediation from any externalities coming from the activity being taxed. For example, if public funds are necessary to treat type II diabetes in children or adults funded by Medicaid, then the “soda tax” should tap that amount. If there is zero consumption, then there will be zero cost due to that consumption. If taxes are too low, there will be too many external costs and not enough revenue to cover them. The question is, when does the tax on a dollar's worth of soda correct the damage done by that amount of product? Can it be estimated? If so, there is your tax amount.