Can public policy stop obesity? In this month’s lead Cato Unbound essay, economist Christopher Snowdon looks at taxes on food and soda and concludes they cannot and do not. Such taxes, writes Snowdon, are neither efficient, nor fair, nor effective—necessary criteria to justify any such taxes. Snowdon traces the theoretical and practical implications of food and soda taxes and finds they are inefficient, unfair, and ineffective both on paper and in the real world.
Snowdon cites a wealth of scholarly research, including his own, to expose many of the flaws inherent in such taxes. He also cites a failed Danish experiment with a so-called “fat tax.” Notably, that tax—implemented by a conservative government in Denmark and repealed by a liberal successor government—is among the best real-world evidence that sin taxes on foods don’t work.
I agree with Snowdon in very large part. I have read many of the same studies he has, and have reached many of the same conclusions he has about those studies. Food sin taxes don’t work. They are unlikely to work in the future. As I will describe in this essay, I also believe that Snowdon’s underlying argument—that taxes should be efficient, fair, and effective—is a reasonable yardstick by which to measure other government policies that pertain to food and obesity. I also argue briefly that punitive food and soda taxes violate the spirit—if not the letter—of the Constitution.
Is Government Promoting Obesity?
What causes obesity? The basic assumption underlying public policies designed to counter obesity is that voters and—particularly—bureaucrats know the cause of obesity and can therefore design interventions that prevent or reverse it. But government policies themselves prove this faith is likely misplaced.
Activists in and out of government have been hard at work in recent years thinking up ways lawmakers and bureaucrats might halt obesity through punitive taxes, as Snowdon capably describes (and refutes). Often ignored in the debate over such taxes, though, are the many ways in which government policies likely promote obesity. This fact raises a necessary question. Rather than seeking to penalize consumers, taxpayers, and businesses, shouldn’t these activists look instead to eliminate government policies that might be responsible for promoting obesity?
The debate over soda is a perfect example of this phenomenon. Is it the scourge that critics claim? It sure seems that way. In 2012, for example, the Center for Science in the Public Interest, an anti-soda group, cited a key U.S. government report to argue that “[s]ugary drinks are the single-largest source of calories in the American diet[.]”
That sounds menacing. It’s also untrue. Sweetened drinks place fourth on the report’s list—behind grain-based desserts, bread, and chicken. That doesn’t make soda a health food. But it does raise the question: where are the policies designed to limit our intake of those other foods? They are nowhere to be found. Instead, government actively encourages Americans to consume them.
Take school lunches. Grain-based desserts, bread, and chicken—again, the top three foods Americans eat in terms of calories consumed, according to the USDA—are often found in the “healthier,” reformulated school lunches mandated by the very same agency. And by “often,” I mean almost always.
A look at the school lunch menu for K-8 students this month in New York City’s public schools, the nation’s largest school system, finds one, two, or even all three of these leading sources of calories on the menu every single day. The lunch for January 12, 2015, for example, is Tuscan Crispy Chicken Sandwich with Creamy Garlic Sauce and Chocolate Grahams. For those keeping score, the lunch of chicken on bread and a grain-based dessert features all three of the top calorie sources. (While it’s true that pizza is the number two source of calories for kids—whereas the top three list takes the food choices of Americans of all ages into account—New York City’s public schools make sure to serve pizza for lunch every Friday.)
If activists wish to design public policies that reduce the number of calories we eat because that’s what’s making us obese, then policies that encourage us to eat more of those foods that already make up the bulk of the calories we already consume would seem to be (to put it politely) a boneheaded approach.
So soda taxes may not be fighting the real problem. But if sweetened drinks are indeed the menace that critics claim, then certainly the government would be crazy to promote the agricultural production of crops that are turned into sweeteners that find their way into soda. Right? Yet that’s the case right now, thanks to two multi-billion dollar policies. The Farm Bill is a massive entitlement program passed by Congress, on average, every five years. It subsidizes corn, which is grown to excess and is then turned into high fructose corn syrup, formerly little-used but now ubiquitous thanks to the subsidies. Sugar producers, meanwhile, benefit from a complex system of price supports and tariffs.
Quite needlessly, taxpayers support the production of sweeteners. And, instead of pushing first and foremost to end the costly programs that subsidize and support them, many critics of sweetened foods and drinks would have government tax consumers for buying the very products that government policies—in the form of taxpayer funding—encourage farmers and others to produce.
There’s a simpler policy alternative. Instead of cheating taxpayers twice, policymakers should opt not to do so even once.
This brings us back to Snowdon’s guiding point—that food taxes intended to combat obesity should be efficient, fair, and effective. I believe, as I noted, that these same principles serve as a rational yardstick by which to measure other government policies that pertain to food and obesity.
What happens when we measure the USDA National School Lunch Program, farm subsidies for growing crops like corn that are turned into sweeteners, and price supports and tariffs to support the sugar industry? None passes muster. They are inefficient. The subsidy/reward and subsequent tax/penalty cause consumers to be taxed at least twice—to enforce the policy, and then to combat its unintended consequences through sin taxes and through healthcare costs borne by taxpayers. They are unfair for the same reason and because the people who most consume the resulting foods are those in lower-income brackets—and who suffer most from obesity. Finally, they are ineffective. As Snowdon writes of soda taxes, their cost far outweighs their benefits “by several orders of magnitude.”
The Principled Argument
In his essay, Snowdon notes it is unnecessary “to make the argument against such taxes on philosophical grounds.” Indeed, he makes a convincing enough case on economic grounds.
But as an attorney with no economic training, I’d be remiss if I didn’t note my belief that punitive food and soda taxes violate the spirit—if not the letter—of the Constitution. A great deal of my own scholarly research focuses on this area. As I noted in comments to New York City’s health department in advance of that city’s ludicrous ban of subjectively large sodas in 2012,
the proposed ban very much harkens back to those acts of British economic aggression against the American colonies in the 1760s and 1770s—which, like the Sugar Act [of 1764], nearly always centered on unfairly taxing and restricting food choices—that led the Founding Fathers to fight the American Revolution.
The battle then pertained largely to the Sugar Act’s steep taxes on molasses, sugar, and rum. The British wanted to force the colonists only to buy British products—both to raise tax money and to punish its enemies in Europe (and their sugar-producing colonies in the Caribbean). The American colonists vigorously opposed the Sugar Act and similar laws—ultimately fighting to expel the British. The issues and actors may have changed, but unjust taxes pertaining to sugar are still at the heart of conflict in America more than 225 years later.
As Christopher Snowdon argues, punitive taxes on soda and food are an inefficient, unfair, and ineffective means of combating obesity. The push for such policies is often made without regard to the fact that existing, massive government policies—including the USDA National School Lunch Program and the Farm Bill—may themselves be causes of obesity. While taxes needlessly punish consumers and businesses, less expensive alternatives exist. These alternatives include putting an end to subsidies, tariffs, and price supports for sweeteners. Doing so would help combat obesity and would do so in a manner that is efficient, fair, and effective.
 To be clear, this is also true of all other farm subsidies.