Roth & Company, P.C.

Roth & Company Tax Updates

April 22, 2005

THE TAX LAW AS DIET SCOLD


fatman.jpgA paper presended at UCLA yesterday discussed the use of food excise taxes to fight obesity. Commenting on the paper, UCLA prof Victor Fleisher has a specific suggestion:

Here's what I propose: an excise tax on High Fructose Corn Syrup. It's in all kinds of junk food, and hardly ever in healthy food. It causes diabetes. There's a close substitute, of course, sugar. But it's more expensive to process food with sugar, so the prices of really bad HFCS foods will rise a bit. Obese people will, at the margins, choose healthier foods. And healthy people who crave sweets can still indulge, just only with the real sugar at a slightly higher cost.

WHAT ARE TAXES FOR?

While the Tax Update is all for slimmer, more attractive people, we demur. From our perspective, there is one critical purpose for a tax system - to fund government. When you try to use taxes for something else - like making fat people thin - you erode the efficiency of the tax law in raising revenue by diverting resources to other things. You have to identify what "high fructose" is, or what foods are bad, and how to deal with a thousand other issues besides "what do I owe?"

From a more practical perspective, it is unlikely that any realistic tax on food will solve this problem. People will just, well, absorb it.

Hat tip: TaxProf blog.




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