Is America Ready for a Fat Tax?

Should junk food and soft drinks be taxed like cigarettes and alcohol? A new study sheds light on whether the so-called "fat tax" would actually leading to a national shedding of pounds -- and a healthier health care system.

Should junk food and soft drinks be taxed like cigarettes and alcohol?  A new study sheds light on whether the so-called "fat tax" would actually leading to a national shedding of pounds -- and a healthier health care system. Obesity is one of the biggest societal problems of our generation: One-sixth of the adults in the world, and one-third of Americans, are obese, putting them at greater risk for a slew of chronic illnesses--from type-2 diabetes to cardiovascular diseases, to cancer. But some conservatives have come out sternly against the concept of a fat tax, with Rush Limbaugh railing against it as “discrimination against the fat.” Meanwhile, the cost of health care will increase by 20% over the next decade as a result of the obesity epidemic. Those who favor the fat tax argue that taxpayers should not have to pay for the bad eating choices of others, and that taxing junk food or calories will be able to offset some of the public costs of obesity. In other words, the perverse incentives of the American health care system currently shifts the personal costs of unhealthy decisions onto the healthy, and a fat tax could properly realign those incentives. But according to a new study of the problem, a fat tax would not necessarily give the American economy--and our overweight populace--the diet it sorely needs.  The study, conducted by the National Bureau of Economic Research (NBER), concluded that taxes on calories may work – but not with any sort of efficiency or rapidity. In fact, the health economists who conducted the report conclude that even a massive 10% increase in the price of a calorie of junk food would only have the potential of reducing average BMI (Body Mass Index, or a measure of body fat based on height and weight) by 1.2 units over twenty years. By comparison, the average American’s BMI increased by 2.7 units from 1980 to 2000. The study’s authors shrewdly note that benefits will “likely post-date the decision-making horizon of an elected official,” and that public policy analysts “will not find a ‘fat tax’ to be a quickly effective solution.” A fat tax may be the politically faddish diet of the moment, but policy innovators are goin to have to work a lot harder to take the weight off.