The Case for a Calorie Tax

Americans, and increasingly peoples across the world, eat too much. We know we overeat. We complain about our fatness, we are constantly trying new diets and we blame the morbidly obese for their illnesses.  Over the past 20 years, we have done very little to change our eating habits.  In fact just the opposite, there has been an epidemic of obesity.

Perhaps it is time to take a lesson from other self-destructive habits like smoking and drinking. In both cases, the most effective method of control has been taxation. At $4/pack, most of the cost of a pack of cigarettes is the tax. By making cigarettes legally available but expensive, we have reduced both adult and childhood smoking and undoubtedly headed off many thousands of deaths due to cancer and emphysema.  Similarly, most of the cost of a bottle of liquor is tax, and the amount of alcohol we drink does depend on the price.

Alcohol consumption does increase cancer risk.  3.6% of all cancer cases and 3.5% of cancer deaths worldwide are attributable to consumption of alcohol.  Further, the risk of cancer increases with the amount of alcohol consumed.  Alcohol also increases blood pressure, risk for motor vehicle accidents and risk for work related injury.  By decreasing our alcohol consumption, alcoholic beverage taxes have prevented many thousands of cases of cancer, prevented hypertension and saved many lives.  As a public health program, the alcoholic beverage excise tax has been remarkably effective, and it even generates significant revenue.

What about food?  Excessive food consumption is clearly habit forming.  Ask anyone trying to lose weight.  The basic fact of obesity is that we are what we ate.  If a person is going to maintain an obese habitus (say 230 lbs for a 6′ tall male), they need to consume about 2740 calories.  This is about 300 calories more than than they would require to maintain an ideal body weight of 180 lbs.  If you reduce your caloric intake, you will lose weight.

How high would a tax have to be to make us alter our eating habits?  Let’s guess that making an unhealthy diet a few dollars a day more expensive than a healthy diet would be enough.  To use round numbers, a penny a calorie would make a 2740 cal obesity inducing diet about $3 per day more expensive than a healthy weight sustaining 2440 cal diet.  A 5′ 4″ female needs about 1800 calories to sustain an ideal body weight of 145 lbs and 2000 calories to maintain an obese weight of 175 lbs.  OK, so women get off a little easier.  On average the women would pay about $6 per day less than the men, about $2,000 over the course of a year.  This is still much less than the average wage disparity between men and women.  A little bit of justice in the world.   The same applies for height. Yes, tall people have a higher healthy body weight and need to consume more calories to sustain a healthy diet, but they also earn about $789 per year more for every additional inch of height, more than offsetting the increased calorie tax burden.  Growing children do need to eat more per body weight than do adults, but their overall caloric intake is still less than that of an adult.

How much revenue would a calorie tax generate?  The average American consumed about 2700 calories day in 2008 and the figure is increasing about 20 calories per year so we may now be closer to 2800 calories per day.  At a penny per calorie, the food consumption tax would be about $28 per day.   It would add $5.40 to the cost of a Big Mac, but only $2 to the cost of a chicken salad and only 31 cents to a serving of broccoli.  Multiplied by 311 million Americans and 365 days per year, the tax would generate about $3.2 trillion per year in revenue or about $10k per person per year at current rates of food consumption.  Yes, that would be a heavy and regressive tax, but it could easily be made less of a burden by reducing other taxes and issuing tax rebates that could be spent on either food or other items at the consumers choice.  Food stamps, could, of course be fully paid out of the food tax revenue.  On the other hand, a calorie tax would help to balance the federal deficit, and would help to cover the $179 billion per year in health care costs attributable to obesity.

Does a calorie tax have a chance of becoming law?  Well it does seem like a long shot given the prevailing anti-tax sentiment in DC today, and there are a number of well known politicians and pundits who might take it as a personal affront.   There are also large and politically active farming, food and restaurant industries that would undoubtedly oppose such a tax. Nevertheless, we have to start some place.  If Americans want to take meaningful steps to address the obesity epidemic, we should think seriously about the role of taxes.

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