Taxing health harms can IMPROVE the economy....

Today's Post: Monday, 11-15-2010

California where I live has a financial emergency. Most of its revenues are down quite a bit due to the economy being so poor.

There are other reasons. But that’s the main cause.

The Federal government has much the same problem.

But that puts the politicians in a real catch 22 dilemma.:

1. If the politicians cut promised programs, the people that cuts off or even harms, give them a hard time.

2. If they increase taxes, even more people are unhappy with them and give them a hard time.

But, even worse, most taxes when raised will slow the economy and wind up not raising revenue that much. And, since virtually everyone is worried about the economy, that right now is likely even less likely to get support.

But there IS a set of taxes that normally would not be doable that might be now.

What could that be?! And, why is that so?

Other than the providing companies, taxing health harms not only doesn’t slow the economy, it gives consumers MORE discretionary income and very quickly lowers health care costs! In short, these are taxes governments can impose that actually can IMPROVE the economy.

A. It gets better. A study was done showing that making good for you foods cost less, increased spending on fattening treats! But taxing sugary foods caused people to buy more real foods.

This means fewer people will get fat, get type 2 diabetes, and get heart disease and some cancers. That cuts health care costs and increases the productivity of the people in the workforce. Each of those improves the economy. (Recent studies have shown that excessive consumption of sugary foods, exactly as we have now in the United States, causes heart disease. We’ve known they tend to make people fat and get type 2 diabetes for many years.)

B. Similarly, taxing cigarettes and tobacco products cuts consumption three ways that would not happen without the tax boost. Some people quit. Some people don’t start using them. And those who keep buying them, buy less.

Few smokers know it. But every single cigarette they smoke begins to speed up their aging and cause heart disease. In addition, recent studies found that both smoking and second hand smoke TRIGGER heart attacks in people with some heart disease but who would NOT have had the heart attacks otherwise.

This means that a new tax of a dollar a pack on cigarettes will cut health care costs within months of being enacted! And, it will cut health care costs even more for years afterwards.

In normal times, the flak from the providing companies and the people who either like those things or have no clue they are that harmful would prevent such taxes. But these are not normal times.

The economy is down and many things are combining to slow recovery. And, one of those things is the increasing brake from continuously increasing health care costs. Much of this increase is completely avoidable with upgrades in what people eat and drink and by reducing smoking and second hand smoke.

Governments today MUST have taxes they can enact without harming the economy or doing more than minor slowing.

Health harm taxes are the best of these two alternatives because they actually IMPROVE the economy and raise money for the government too.

People adjust by buying less of the health harming things. That either leaves them with the same discretionary income or more. Other taxes or tax increases leave them with less discretionary income.

So, since California tends to be a pace setter and trend starter AND really needs a way to get more revenue without slowing the economy, in addition to very small tax increases that slow the economy just a little, I propose that California enact these taxes.:

1. Regular soft drinks add calories to people without any decrease in hunger. Then, hours after drinking them, the sugar spike reverses and the low blood sugar causes people to be hungry for sugary foods. Diet soft drinks cause people to crave sugary foods immediately after people drink them. Ninety percent or more of the people who drink diet soft drinks are as fat as people who drink the regular ones.

So, California should tax ALL soft drinks at 10 cents an ounce. This should be a new part of the sales tax since the mechanism to collect sales tax is already in place and works well.

2. Foods that contain sugar, high fructose corn syrup even if re-labeled as corn sugar, artificial sweeteners, salt, MSG, and/or hydrogenated oils either make people fat or help cause heart disease or both.

Virtually none of these foods are hit with sales tax now. So, my second proposal is that any food with any of these ingredients, even one, now be taxed with sales tax.

3. Smoking and second hand smoke, we are now finding out, are dramatically more harmful to health than was dreamed of even a few years ago. And, not one smoker in 10 knows this yet.

So, an additional tax of $1.00 should be imposed on cigarettes and a comparable tax be imposed on other forms of tobacco.

All three of these taxes should take effect in 30 days or less.

The defense of these taxes when people complain or the providing companies complain is simple.

The governments need a way to raise revenue that improves their economy and lowers health care costs.

Those two things are simply more important priorities than soothing people who dislike them.

Since people want a better economy so badly now, by selling these taxes as a way to do that without cutting needed programs, I think they may actually be a solution to the dilemma faced by the State of California.