Public Health Taxes Poll Pretty Well
I’m an enthusiastic proponent of the idea of public health taxes—raising additional revenue at the margin not by taxing people’s work, but by taxing consumption of public health hazards like sweeteners and booze. And here’s Ezra Klein discovering that such taxes are possibly more popular than he’d imagined. He cites this slide from an NPR/Kaiser poll:
I think part of the reason this gets a relatively good result is that it’s framed in the context of revenue. We’re not talking about taxing soda, we’re talking about providing for health care. But that will cost money. And the money has to come from somewhere. And taxing public health hazards sounds like a reasonable place to get it. I’ve said before that I think this is the right way to think about it. Taxing soda in order to make people skinnier sounds totalitarian and it’s not obvious to people whether or not the health benefits would even be large. But taxing soda in order to pay for health care sounds like a relatively benign way of raising taxes—at the margin, it will do more to promote health than to depress economic activity.
This kind of thing is important, because I think as we move toward raising the volume of revenue that we’ll be needing over the next 10-15 years it’s crucial to think hard about the efficiency of the tax code. That means cracking down on deductions and loopholes and pigouvian consumption taxes, not just higher rates.
As it happens, though, I don’t think paying attention to this kind of polling is that significant. For one thing, as Kevin Drum emphasizes, opinion on unfamiliar issues is extremely malleable. But more important, I just don’t think public opinion on issues is all that important a driver in politics—just look at the fate of mortgage cramdowns or what have you. The important point is that if you’re going to have a more generous welfare state and an aging population and continued advances in medical science you’re going to need more money, and you’re going to need to get it in a way that’s consistent with economic growth. Voters really don’t like recessions. Taxes on public health hazards meet that standard, so they should be appealing.
27 Responses to “Public Health Taxes Poll Pretty Well”
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April 30th, 2009 at 4:16 pm
OT, Matt, but Business Week has a very handy article for you of your favorite cities, the more blue-eyed the better:
“In Mercer Consultings annual Quality of Living Survey, Europe once again dominates the list of 215 countries around the world. The top three cities are, by rank, Vienna, Zurich (last year’s winner), and Geneva. Commonwealth nations fare pretty well, too, winning 9 of the top 30 spots — even though London comes in only at 38. The U.S. also fares poorly, barely making it into the top 30 with Honolulu and San Francisco in the bottom two places. The top city in Asia is Singapore, at no. 26. No cities from Africa or South America are in the top 30. The bottom? Baghdad once again comes in at 215.”
http://finance.yahoo.com/family-home/article/106994/The-Worlds-Best-Places-to-Live-2009
Vienna, Zurich, and Geneva! There’s nothing Matt likes more than a city full of blue-eyed Northern Europeans, maybe with some well-behaved Asians tossed in to provide some ethnic dining.
April 30th, 2009 at 4:18 pm
This smacks quite a bit of micromanaging people’s decisions, particularly given that the correlations between various vices and health care expenditure typically are univariate analyses that fail to consider the benefits as well. Caffeine might raise blood pressure in some people, but it also has been shown to raise IQ by a couple of points. Too much fat might clog an adult’s arteries, but too little will stunt a child’s brain development.
Also, why on earth would you tie all the revenue dedicated to an ongoing need to the level of behaviors that you would ideally like to reduce? Look what happened to the towns that put in stop-light cameras. When the people started obeying the law, the revenue dropped so much that towns started either ripping out the cameras, or gaming them by shortening the yellow, essentially entrapping people who entered the intersection when the light was green and had it go from yellow to red after they entered the box but before they cleared it. Perverse incentives abound in all these sin taxes.
April 30th, 2009 at 4:18 pm
Don’t tax him; don’t tax me
Tax the fella there behind that tree.
April 30th, 2009 at 4:27 pm
The important point is that if you’re going to have a more generous welfare state and an aging population and continued advances in medical science you’re going to need more money, and you’re going to need to get it in a way that’s consistent with economic growth. Voters really don’t like recessions.
According to Krugman, government spending of any kind stimulates the economy, leading to economic growth. All that matters is the scope of the spending. Since that’s the case, then the increase in GDP engendered by increased government spending on health care should lead to higher tax revenues without us increasing tax rates. After all, there is a pretty substantial multiplier associated with this spending. We can use these higher revenues to pay for more health care, etc. and this will, in turn, increase our GDP. I mean, if an increase in gov spending makes us richer in a downturn, why won’t it when we are in surplus?
April 30th, 2009 at 4:34 pm
There’s one factor that you didn’t address in the post to which I’d be curious to hear your response – one downside of these sorts of taxes is that they tend to be highly regressive. This is true of most sales taxes of course, but the fact that there is a strong correlation between economic status and consumption of sugary and processed foods, cigarettes, etc., means that these fall even more heavily on the poor.
I think your right that the difficulty in increasing any taxes may make these sorts of revenues an easy target, but isn’t there an argument that these taxes would hit those who can afford them the least?
April 30th, 2009 at 4:36 pm
Please elaborate on the distinction between ‘public’ and ‘private’ health hazards. I ask because, should I choose to contract, say, swine flu virus, and then go to the theater, I’m pretty clearly a hazard to the public. Feel free to tax the heck out of me then. But if I consume lots of soda and and loll about on the couch, that seems a pretty private thing to me – no externalities to speak of – and so not something you should want to impose a special tax on.
Let’s take it a bit further: if it’s OK for taxes to explicitly reflect a judgmental posture, then how do I argue against someone proposing to heavily tax abortion – ’cause it may be legal, but you know, everyone wants to keep it rare?
I’d prefer to live in a society that’s liberal enough to allow people to choose their own poison, without making them pay extra for it. Although of course I’ll take the tax over the prohibition any time, thank you.
April 30th, 2009 at 5:05 pm
What Kevin said.
See also: red wine, chocolate, cholesterol. And what about red meat: grass-fed, good; corn-fed, less good. And salmon: wild, good; farmed, full of mercury.
April 30th, 2009 at 5:17 pm
I agree with eb. What constitutes public health hazards? Reading in poor light? Playing in the street on bicycles? Matt’s idea sounds totalitarian because it is totalitarian. Big Brother will tell you what is good for you. Any other activities require written permission from you doctor.
And I thought the real costs associated with health care were caused by people who live too long and die too slowly not the people who die early.
April 30th, 2009 at 5:18 pm
But if I consume lots of soda and and loll about on the couch, that seems a pretty private thing to me – no externalities to speak of – and so not something you should want to impose a special tax on.
Massive externalities. Society is going to be paying for your health care in MY’s world, not you, so your obesity-inducing habits are of key interest to the state.
April 30th, 2009 at 5:24 pm
THE NANNY STATE
Just what the GOP needs to get back in the game!
April 30th, 2009 at 5:34 pm
It’s all fine and good to raise these taxes, but as everyone knows with an increase in taxes on cigarettes – fewer people smoke making the revenue brought into the government lower effectively making the increase in tax revenue almost nil. Where do we get the money when people stop smoking (or whatever “bad” thing you want to tax)?
At what point is it fair to have a minority paying for the majority’s health care costs? Especially since with the taxes already collected on cigarettes outweighing the costs to the public health system… clearly – this is happening or we wouldn’t keep raising taxes on cigarettes to fund other programs.
April 30th, 2009 at 5:48 pm
I think Matt Y. is absolutely wrong and pig-headed on this issue. I think that his silly sin-tax advocacy is so shallow minded as to be stupidly ignorant.
The reason that taxes like alcohol and tobacco are popular is that they tax marginalized portions of society, tend to be regressive, and the users lack credible advocates. Matt, please tell me how it makes sense to tax the most poorest and most vulnerable members of society (i.e. those who use tobacco, for instance) when you need to plug a budget hole. Just don’t tell me that a) it will save them money in the long run by reducing demand sufficiently (this goes against your revenue argument) or b) because it saves revenue in other places like health care (all-in studies show that savings from avoiding some maladies are just dispaled to other maladies because everyone dies, and living longer just means more social security).
How is it painless to tax soda rather than income???? Either way, money is removed from citizens’ pockets to pay for services. By taxing soda, you arbitrarily assign the tax to people who like soda. Why does this make sense? Why not just pass a law taking all of Ralph Ellison’s and Bill Gates’ money- just as arbitrary, and a whole lot more painless to me. If the law is being passed to provide universal health care, shouldn’t all citizens recognize that this benefit will be paid for by themselves, whether they eat twinkies or not?
And also don’t tell me taxing soda has anything to do with public health. Public health is indectious disease, not whether someone dies of obesity or just plain old age. Please don’t ignorantly smear the line between public and private health just to make a stupid point. Public health has a meaning.
Matt- do us a favor. Write something with more sense.
April 30th, 2009 at 5:59 pm
I think I’ve cracked the Matt Yglesias Code. We often call for policies for one reason while hiding/avoiding the real reason. I think MY wants to use government to control his bad habits. Example:
So, unable to quit smoking he uses government coercion as a springboard.
Now, MY seems to maybe be a bit rotund. With “vice” taxes on junk food he can be incentivized to eschew them. Hello, six-pack.
With single-payer health care enforced and his general “public-mindedness” he’ll feel compelled to make a host of difficult-to-make exercise choices so as not to burden the state. (Bit of a stretch, here)
I may not have completely cracked the MYC, but I think I’m on my way.
April 30th, 2009 at 6:07 pm
Especially since with the taxes already collected on cigarettes outweighing the costs to the public health system
What costs? We pay roughly 7% less on healthcare than we would in a world without smoking. MattR has it exactly right when he says:
The reason that taxes like alcohol and tobacco are popular is that they tax marginalized portions of society, tend to be regressive, and the users lack credible advocates
Could not have put it better myself.
April 30th, 2009 at 6:12 pm
I think there are a couple of problems with this idea of taxing “unhealthy” food. First, there is a presumption of knowledge concerning the ability to define what is and is not healthy. Yes, there is some general knowledge concerning what appears to be more healthful versus what appears to be less healthful but there is also a great deal of data showing actual consumption levels of the food items in question plays as strong a role in defining what is and isn’t healthy. Red wine in excess is bad while in moderation appears more heathful than none at all. How do you tax that? Red meat daily is unhealthy but in moderation packs a tremendous amount of protein and nutrition. Corn is largely benign – except when it’s turned into a sweetner and then used in extreme quantities in soda. That’s just scratching the surface of the quandary of trying to define what is and isn’t healthy.
Second, is it a good idea to create a primary funding source based on taxing items when part of the purpose of the tax is to deter (or eliminate) the consumption of the item being taxed? If the so-called “unhealthy” foods are taxed to the point that their consumption is greatly reduced, where does the money come from to pay for health care? People are still going to get sick, age, and die. Your not arguing that reducing or eliminating unhealthy eating habits is going to actual cause humans not to age and suffer all the medical problems that age brings with it? I’m willing to except that a more healthful diet could reduce some medical expenditures but even if everyone started eating “perfectly” they are going to get old and suffer the diseases and maladies of the old. Maybe the definition of what’s “old” gets pushed back a few years but there will still be strokes, heart attacks, cancers, broken hips, Alzheimer’s, Parkinson’s, etc.
There is no magic tax that will kill two birds with one stone. Sure, taxing unhealthy things is legitimate to serve public health objectives (it’s getting me to quit smoking which is good) but defining what is and isn’t unhealthy as food is not anywhere close to an exact science and they views are changing all the time about what constitutes a “healthy” diet. On top of that, consuming this “healthy” diet won’t stop anyone from getting sick and, eventually, dying.
Why not just make the straight forward case that universal health care can increase overall medical care while decreasing costs while treating the issue of “unhealthy” foods consumption as a matter of public health policy?
April 30th, 2009 at 7:39 pm
I’m not a huge fan of the idea of levying taxes on sugar or fatty foods, or what have you, because doing so seems to move us away from the desirable goal of broadening the tax base. Although Pigovian taxation is a nice concept, in practice when politicians start talking about “targeted” taxes you can be sure what’s coming down the pike is an increase in the complexity and inefficiency of the tax code. And yet such talk seems to get more popular, even among politicians who should know better, because it sounds good, and reasonable, to low information voters (and when it comes to tax policy, I’d say — with an admittedly large degree of patronization — that “low information” describes about 95% of the electorate).
Anyway, if they want to give us a federal VAT, and then increase the rate for certain naughty substances (cola, booze, what have you), I’m all ears. But in isolation, no, I think targeted sin taxes aren’t the way to go.
April 30th, 2009 at 7:54 pm
Shouldn’t we impose extra taxes on practicing homosexual men, because their behavior is highly detrimental to health from an STD standpoint?
For that matter, should we not put heavy taxes on anyone who has more than one sexual partner?
Why does suggesting either of these things get the antidiscrimination police in a tizzy, but taxing vices like overeating and smoking is A-OK?
I cringe whenever I hear about “sin taxes.”
April 30th, 2009 at 11:34 pm
Dave R-
what you said makes little sense. Please tell us why unhealthy food or “things” are a public health objective. Please tell my why you stuffing your mouth with twinkies affects any of the rest of us.
It doesn’t.
There are lots of things not good for you. Personally, I think the magazine US Weekly is the most unhealthy thing alive. That and watching NFL football. Please tell me why taxing twinkies and not Us Weekly or the NFL is good.
For a good to be a public good, that has to mean that its consumption or production involves externalities that others share in beyond the producer or consumer. You drive, everyone’s air goes up in temp. We have public schools, perhaps we have a more productive society and less crime. Public health is about infectious disease, fluorine in drinking water and the like. in Beyond pure aesthetics (there are far too many obese people in the US for us to look at), it would be hard to define the externalities of twinkies.
By the way, this is also what makes me most nervous about universal healthcare. I believe that in a wealthy society such as ours, not providing sufficient health care to significant portions of the population is both immoral and not in all of our long term interest. That said, yglesias and other nannies scare me because subsidized health care gives them the excuse to cite anecdotal data to attempt to regulate all of our personal habits under the guise of “public” health and health costs. And this is why conservatives are scared of progressive policy, and why progressives have to put reasonable policy in without falling to the temptation of totalitarian BS.
May 1st, 2009 at 2:08 am
Matt R. – I don’t think it’s a good idea, in general, to tax any particular food item as “unhealthy” because in most if not all cases it’s more a matter of the degree of the item’s consumption than the item being inherently unhealthy.
Although, I don’t know about you but if one could really point to a food product (let’s say soda because that’s pretty useless overall) and prove conclusively it’s overall detriment to the health of millions of individuals then I’d be on board with taxing it out of use. I just wouldn’t plan on financing my health care system with it.
The reason, to show you why your twinkie example is wrong, is that if 20 milliion of us are all individually stuffing our faces with twinkies (or soda) to the point that all of us are obese and suffering from the illnesses of the obese then we are a public health problem because we are disproportionally using the health care resources of the society. We are clogging emergency rooms reducing their immediacy and effectiveness, we are driving up the costs for care by requiring hospitals to staff for our excessive needs, and we are driving up the cost of health insurance premiums while reducing the services the insurer can afford to offer. That does effect everyone.
May 1st, 2009 at 5:21 am
I believe that in a wealthy society such as ours, not providing sufficient health care to significant portions of the population is both immoral and not in all of our long term interest.
There’s no reason that you can’t form a voluntary collective of wealthy liberals to run your own free health care system in the US for the poor. Absurd taxation (well, more absurd), monopsony, and the takeover of another 10% of the GDP by gov is not the only alternative to our current system.
May 1st, 2009 at 6:48 am
The reason, to show you why your twinkie example is wrong, is that if 20 milliion of us are all individually stuffing our faces with twinkies (or soda) to the point that all of us are obese and suffering from the illnesses of the obese then we are a public health problem
Why not simply tax the obese? If my genetic makeup is such that I can drink soda and eat twinkies without getting fat, then I am not imposing any health problems on the public. Why make assumptions about the consequences of certain behaviors when it’s possible to literally measure the results.
Another problem with this idea of taxing “unhealthy” foods is that the need for revenue creates the incentive to categorize everything as sinful and therefore taxable. Certainly PETA would push the idea that it’s not just soda and twinkies that are unhealthy but also anything with eggs, milk, red meat, etc, etc. Politics would determine what got taxed as much or maybe more than medical science.
May 1st, 2009 at 8:44 am
Dave r-
lets continue extending your argument to reveal it’s absurdities:
In the same way a national health care system enables punative taxes on food, shouldn’t it also do so on sex? Shall we tax sex because it not only increases health care costs (STD’s, childbrths), but also creates children, costly little buggers with their school and what-not.
How about team sports equipment? People seem to get injured more playing team sports than doing pilates. I think it would be best to ensure that everyone in the united states practice non-impact exercise so that my tax bill is lower.
How about curfews on friday and saturday night for everyone, or maybe just a huge tax to enter the streets? I think too much rough housing occurs on weekends that gets people in trouble and gets them sent to the hospital. If we could only tax you $1000 every time you moved about the streets after 7 on friday and saturday, that will disauade would be revelers, increase government revenues, and decrease health care costs.
As for Healthy Markup- please tell me how a health care system costing twice as much as other industrialized nations but covers 40% less people with insurance is efficient or desirable.
May 1st, 2009 at 10:31 am
I have a GREAT idea: We should continue subsidizing the production of cheap high fructose corn syrup (and other cheap corn products) so that Pepsi and Coke can keep their prices artificially low. Then we can tax that Pepsi and Coke to pay for healthcare. GENIUS!
Matt, why stop at taxing unhealthy food? What about unhealthy behavior? Like say, riding bicycle on D.C. streets…
May 1st, 2009 at 11:04 am
Let’s just hope legislators don’t lose track of the fact that moderate alcohol consumption is *good for you.* (I’m already having trouble affording my daily pint–or two–of microbrew.)
May 1st, 2009 at 4:30 pm
@21 – Really?
@22 – how about an honest argument and not a ridiculous one. Your going to equate eating twinkies and drinking soda with human reproduction and athletic participation? As I said before, I’m not advocating it but I wouldn’t let it stand in the way of getting a consensus on national health care.
@24 – you’ve touched on a primary reason applying a tobacco solution to food stuffs is probably a bad idea. Tobacco is basically unhealthy but food items are much more complicated. There are any number of items in moderation that are healthy and good but in excess are highly detrimental to one’s overall health.
May 1st, 2009 at 6:17 pm
Dave R-
Let me try to make the point a little more clearly. You’re right that the suggestions are a little more absurd. But the absurdity demonstrates that the intent of sin taxes is not to tax beahvior that creates health care costs. The real intent is about making political distinctions among activities and essentially targeting taxes at marginalized and small pockets of society while ignoring the vaster parts of the population who have more clout. The alternative tax options I cited are absurd (politically) because they target greater proportions of society (and those with more clout) and don’t appeal to any particular prejudice (where is there interpersonal “sin” in having a smoke anyway?).
But there is nothing aburd about extending the (absurd) logic that once government provides health care, personal health is a public good because good health supports public revenues. Which is why we have to be careful to mind the distinction between public goods and publicly financed private goods.
I’ll also offer you another extension of your poor definition of public goods (those that support public revenues). By this definition, the government has the right to shape the economy in other areas where it is involved like:
-taxing purchases of all non-Chrysler vehicles
-discouraging pay-down of credit card balances held by TARP banks
-encouraging cigarette use and skydiving among elderly pensioners with heart conditions
Tell me why why this is inconsistent with your policy advocacy of encouraging or discouraging activities that “affact everyone” through government finances.
May 1st, 2009 at 7:03 pm
Do you have some secret oracle that tells you what is the “real” intent or do you just somehow know? Is it possible that there can be multiple intents and purposes? To take this back to tobacco (which I suspect is what we are really talking about anyway), what group other than tobacco users is marginalized by taxing cigarettes? Smokers cut across gender and socio-economic class. The tax is certainly regressive but the idea isn’t to extract a societally imposed tax for the sin of being a smoker (or being poor and a smoker) – it’s to stop people from smoking because smoking is inordinately expensive (and particularly deadly)not just for the individual but for the society as a whole.
What I continue to say is that if you can find a food product similar to tobacco – then it wouldn’t be a bad idea to treat it like tobacco. I also continue to say that I don’t think there is such a food item but I’m open-minded enough to consider evidence to the contrary.
The only thing that control’s the government’s involvement in the economy is the political process. What else do you think there is?