Tuesday, August 2, 2011

The "Nanny State", Taxes, and "Bad Behavior"

In a recent New York Times article, food columnist Mark Bittman advocated a tax on " bad food." He argues that such a tax would result in "billions of dollars annually" which he feels should be used to support the consumption of "healthy food." He also advocates that the taxes take the form of an excise tax, not a sales tax, in that the former are included in the price, whereas the latter are added at the check-out counter. There is little doubt that such tax manipulation would have some of Bittman's desired effects, but of course the burden would primarily be borne by low-income families and individuals - those who must carefully watch their dollars - whereas the rest of us would hardly bat an eye at the Bittman-estimated extra $1.44 per six-pack of Pepsi.

This raises two interesting issues - the rise of the "nanny state" and the taxing of "bad" behavior or "bad" habits, or "bad" foods as a means of generating government revenue.

The "nanny state" dictates behavior. Usually, via some form of tax, it strongly discourages certain behavior which is considered generally harmful to a person's health and welfare, thereby having a major negative economic impact on society. In its race to do so, however, it treads on individual rights that are not directly detrimental to others.

One could argue that the government, as the major underwriter of health care and general welfare, has not only the right, but the fiscal responsibility to impose "good behavior," "good nutrition," etc. on its citizens for the benefit of the country's interests and security. By virtue of its capacity as the principal provider of health care, the government acquires the right to impose regulations on how a citizen's health care should be managed. Should this be the case, the government ("nanny state") could influence not only our nutritional behavior, but the scheduling of mammograms, colonoscopies, genetic evaluations, etc. and other preventive initiatives.

Governments always need money. Our representatives are constantly searching for new revenue sources. So why not tax "bad behavior," "bad food," etc. as a means of raising dollars? This is a tax plan which is targeted to eliminate itself. If one actually terminates the taxable "bad behavior," etc. then the tax dollars would disappear! If these dollars are dedicated solely to eliminating the taxable "bad behavior," and this behavior is, in fact, eradicated, then we have a beneficial outcome. On the other hand, government may become dependent on these " behavior" taxes as a source of general income - income that was originally intended for a dedicated purpose, but in time of fiscal need, may be "borrowed" to meet pressing obligations.

Should taxes be punitive and be levied as a means of raising income? If certain behavior is deemed "bad for the nation" then shouldn't it be eliminated rather than taxed, and participation in such behavior be a misdemeanor or a felony? Bad food shouldn't be taxed - it should be removed. Cigarettes shouldn't be taxed - they should be illegal.

Where should a society draw the line between individual rights that have no direct effect on others, and societal rights imposed on all members for the general welfare.

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