• April 2015

The Fat Tax Continues to Generate Controversy

Information based on research compiled by the Inkandescent Team

Illustration by Michael Gibbs

The idea of a fat tax keeps resurfacing despite how controversial it is. The goal of a fat tax — a tax or surcharge placed on fattening food and beverages, or on overweight individuals — is to discourage unhealthy diets and offset the economic costs of obesity.

In fact, it is a type of Pigovian tax, which is levied on legitimate market activity that produces negative consequences for society as a whole.

For example, many countries apply extra taxes to cigarettes in order to reduce the negative health and fiscal consequences resulting from cigarette smoking. Similarly, a “fat tax” is a tax applied to foods containing a specified level of fat, or a certain kind of fat, in order to reduce health and economic problems produced by the over-consumption of these foods.

Science Weighs in

However, a May 2012 report in the British Medical Journal suggested that taxes on unhealthy food and drinks would need to be at least 20 percent to have a significant effect on diet-related conditions such as obesity and heart disease. Ideally, such a tax should be combined with subsidies on healthy foods such as fruit and vegetables, add experts on bmj.com today.

In another study in the New England Journal of Medicine entitled, “The Public Health and Economic Benefits of Taxing Sugar-Sweetened Beverages,” researchers show that a 1-cent-per-ounce tax on sugar-sweetened beverages may reduce the consumption of those beverages by 25 percent.

Additional studies suggest that as the price of a food decreases, individuals get fatter.

However, there is also evidence that obese individuals are less responsive to changes in the price of food than normal-weight individuals, as reported in the American Journal of Clinical Nutrition.

Where did the idea of a “fat tax” come from, anyway?

  • In 1942, physiologist A. J. Carlson suggested levying a fee on each pound of overweight, both to counter an “injurious luxury” and to make more food available for the war effort.
  • The concept was reintroduced by Milton Merryweather and P. Franklin Alexander in the late 1970s.
  • It became a national discussion in the early 1980s when Kelly D. Brownell, director of the Rudd Center for Food Policy and Obesity at Yale, proposed that revenue from junk-food taxes be used to subsidize more healthful foods and fund nutrition campaigns.
  • In a 1994 op-ed in the New York Times, Brownell noted that food costs were out of balance, with healthy foods costing more than unhealthy ones. The article, which proposed the “fat tax,” elicited controversy and outrage nationwide.
  • Radio talk show host Rush Limbaugh spoke adamantly against Brownell and the tax and the general principle of governmental intrusion into food choices and a possible invasion of privacy.
  • The fat tax proposal was listed as number seven on the 1997 list of U.S. News & World Report’s “16 Smart Ideas to Fix the World.” Soon after, Time magazine named Brownell one of the “World’s Most Influential People.”

So is the idea clever, or crazy?

In December 2003, the World Health Organization proposed that nations consider taxing junk foods to encourage people to make healthier food choices. According to the WHO report, “Several countries use fiscal measures to promote availability of and access to certain foods; others use taxes to increase or decrease consumption of food; and some use public funds and subsidies to promote access among poor communities to recreational and sporting facilities.”

Economist Jonathan Gruber points to the effect taxes have had on alcohol and tobacco use, noting that five studies published between 1981 and 1998 found that drinking declined as the price of alcohol increased. The same holds true for tobacco.

In California in 1988, Proposition 99 increased the state tax by 25 cents per cigarette pack and allocated a minimum of 20 percent of revenue to fund anti-tobacco education. From 1988 to 1993, the state saw tobacco use decline by 27 percent, three times better than the U.S. average.

A CBS News poll from January 2010 reported that 60 percent of respondents oppose a tax on items such as soft drinks and foods considered to be junk food, while 38 percent support it.

An even larger number, 72 percent of Americans, reported that they believe a tax would not actually help people lose weight.

A February 2010 poll by the Quinnipiac University Polling Institute found that New York residents overwhelmingly favor a soft drink tax, with 76 percent for it and 22 percent opposed. The poll found both Republicans and Democrats favor the tax.

However, the question of whether or not taxation actual influences diet is an empirical question and not simply a matter of public opinion.

How would you implement a fat tax?

Researchers suggest that implementing a fat tax requires specifying which food and beverage products will be targeted. They note that this must be done with care to avoid surprising and perverse effects. For instance:

  • Consumption patterns suggest that taxing saturated fat would induce consumers to increase their salt intake, thereby putting themselves at greater risk for cardiovascular death.
  • Taxation of sodium has been proposed as a way of reducing salt intake and resulting health problems.
  • Current proposals frequently single out sugar-sweetened drinks as a target for taxation because cross-sectional, prospective, and experimental studies have found an association between obesity and the consumption of sugar-sweetened drinks. However, experimental studies have not always found an association, and the size of the effect can be very modest.
  • Since the poor spend a greater proportion of their income on food, a fat tax might be regressive. To make a fat tax less burdensome for the poor, proponents recommend earmarking the revenues to subsidize healthy foods and health education.

The question remains: Does the government have the right to impose a tax like this on its citizens?

Perhaps, proponents insist, for there may be no better way to cure the obesity epidemic.

But, J. Michael McGinnis, a senior scholar at the Institute of Medicine, points out that obesity stems from the collective habits of how active people are and how much they consume. He says that these imbalanced behaviors contribute to 40 percent of early deaths in the United States.

Indeed, statistic show that in the late 1970s, adults in their 50s weighed 20 pounds less than 50-somethings do today. These facts push some people to agree that the United States should declare obesity a disease so that we could help them recover from it.

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