Germany and the Fat Tax

As a libertarian, I believe that an important role of government is to protect and defend our liberty from private interests who through coercion would wrest our freedom from us.  Too often, those in government act as if they are the proctors of the unwashed masses who are to stupid to act in their own interest or purposely trying to ruin "well crafted" government programs.  (HT Drudge Report)  Hugh Higgins, an AOL contributor writes about efforts by German legislators to pass a tax on obesity in "Germany Weighs Tax on the Obese." 

Marco Wanderwitz, a conservative member of parliament for the German state of Saxony, said it is unfair and unsustainable for the taxpayer to carry the entire cost of treating obesity-related illnesses in the public health system.

"I think that it would be sensible if those who deliberately lead unhealthy lives would be held financially accountable for that," Wanderwitz said, according to Reuters.

Wanderwitz would create a backwards system that provides healthcare to all then capriciously limits care to lessen the cost burden to the state. the state is the master and state objectives supersede individual freedom.  To keep costs low, the government would tax one unhealthy behavior, weight. 

Obesity adds to an individual’s health risk, but what about eating too much salt, riding motorcycles, engaging in unprotected casual sex.  I could go on; exactly half of our activities are more medically costlier than average.  Higgins quotes Jurgen Wasem who makes just this point. 

Health economist Jurgen Wasem called for Germany to tackle the problem of fattening snacks in order to raise money and reduce obesity.

"One should, as with tobacco, tax the purchase of unhealthy consumer goods at a higher rate and partly maintain the health system," Wasem said, according to Germany's English-language newspaper The Local. "That applies to alcohol, chocolate or risky sporting equipment such as hang-gliders."

Wasem taxes get closer to a socially optimal solution if all citizens are homogenous, but they are not, and if one believes that the state has the responsibility to prod, prick and poke citizens to conform to state objectives.  Higgins continues

Walter Willett, a professor of nutrition at the Harvard School of Public Health, described the idea of a fat tax as "not humane." He told AOL News that lifestyle is not the only factor in obesity, with both genetics and urban environments playing major roles.

"It's not fair to tax somebody just for being obese," Willett said. "Most people who are obese would prefer not to be so."

Assuming that the average citizen knows as much about health risks as government regulators and more about their own risk characteristics, a market system of healthcare better prices all discernable risk.  The government, with the consent of its citizens could still maintain the flexibility of markets by establishing medical savings accounts backed up by a catastrophic insurance policy for all citizens.  While the freedom of individuals to spend their own earnings is violated, at least the violation would minimize the loss of freedom and the cost to the taxpayer. 
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Phat Phee Two

As James Queally of the Stanton Island Advance phrased it, New Yorkers "stoutly oppose" the Phat Phee, an 18% tax on sugary soda drinks. NY1 news reports that 60% are against the tax to 37% in favor.

Elizabeth Benjamin of The Doctor Is In (Cyberspace) reports that State Health Commissioner Richard Daines has stoutly supported the phat phee despite thin support, noting that the phee is more of a health policy than a phee. Benjamin reports that the Phat Phee,

according to Daines, is to disincentivize sugary drinks, which research shows are the top culprit in the childhood obesity epidemic, and encourage people to return to 1970s-era levels of consumption of other, less fattening beverages like milk and water. The side benefits, according to Daines, include the fact that cutting down on soda saves money for consumers and whittling the state's collective waistline could save money for taxpayers in the form of fewer obesity-related health problems that need to be treated - particularly for Medicaid recipients.

Yikes! Let the state pay for a little health care for the poor and they will then want to control your diet. I would have preferred the measure as a simple money raising tax. Apparently, the goal of the state is to prolong life, decrease liberty, and allow the pursuit of happiness only if it is safe. I hope Health Commissioner does not learn about motorcycles, skiing, or sky diving. Imagine what would happen if we taxed every food or activity that was less healthy than average. I like Assemblyman Felix Ortiz's proposal better. Let's just tax phat people.

While New Yorkers got the Phat Pee right, they got the millionaire tax wrong, with 84% supporting the tax and 13% opposing. If someone had suggested a tax on Jews or Blacks, we would properly be offended, but tax the rich simply because they are rich and the majority support the tax.

"Ah ha," you say, "you cannot help being a Jew or Black," and you are right. For most it is a genetic or social characteristic given at birth by our parents. But for most, being rich is better than a genetic trait, it is a virtue. Most of the rich earn their wealth by hard work and diligence. Like anything else, if you tax a virtue, you will get less of it.

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Phat Phee?

In a Timesunion.com article, James M. Odato described New York's governor, David Paterson's, first budget plan (HT to Drudge). Given the troubled economic times, it contains a mixture of spending cuts and tax increases designed to close a $12.5 billion dollar deficit. Among the tax increases is a $404 million tax on non-soda drinks that some are calling an obesity tax and which I shall call a phat Phee in a probably vain attempt to be more hip.

I find the article interesting for a couple of reasons. First, President Elect Obama is contemplating $1 trillion stimulus package of tax breaks and spending cuts. Economists have long recognized that state budgetary constraints at times force state governments to work at cross purposes with the federal government. Even if the incoming Obama administration successfully enacts a stimulus package, its effectiveness will be limited by state governments attempting to balance budgets.

Even on a micro level the New York seems to be working at cross purposes with the federal government: one likes domestic sugar growers, the other does not, but both seem aimed at punishing sugar consumers.

The federal government protects domestic sugar producers through a system of quotas that limit the amount of sugar that foreign countries can sell in the United States. These quotas raise the cost of all goods that use sugar and sugar substitutes (I shall refer to both as sugar, the reasoning doesn't change). The benefits of the quotas accrue to a few sugar growing states and are paid for by consumers in sugar consuming states. The federal governments favors sugar growers over consumers.

New York does not like sugar growers. Why should it? It doesn't have many. By taxing a product with a lot of sugar, New York mitigates the flow of federal dollars leaving the state. Its consumers are hurt yet again.

I recommend that people who prove that they lost weight through diet and exercise deserve a tax break. It would be the Phat Pharm Phat Phree Phat Phee tax break.

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