The taxes I pay keeps the doctor away
The ethics of “sin taxes”
The other day Marc linked to a New York Times Room for Debate discussion on whether people should be paid to stay healthy. While that post focused on rewarding healthy behavior, much of the current debate and policy centers on restricting and discouraging unhealthy behavior. A common method for doing this is by imposing “sin taxes” on “certain objectionable products.” For instance, taxing cigarettes at a high rate in part to discourage people from purchasing them. These sorts of taxes are often popular with voters, but are they justifiable?
One of the major arguments in favor of “sin taxes” is that consuming fatty foods or smoking cigarettes impose higher health care costs on everyone else. However, as economist Gregory Mankiw pointed out in a recent NY Times editorial the math isn’t quite so simple.
If consumers of these products die earlier, they will also collect less in pension payments, including Social Security. Economists have run the numbers for smoking and often find that these savings may more than offset the budgetary costs. In other words, smokers have little net financial impact on the rest of us.
If these products only harm oneself is it still right to tax them? Mankiw expresses a cautious skepticism of these policies, implying that they sets us on a slippery slope towards further government paternalism. However, if one objects to the government impeding on individual responsibility by taxing soda are we also obligated to rethink government involvement in other areas of our life? What about school programs that teach healthy eating habits or the dangers of smoking? After all, the government funds public schools and help set curriculums.
Also, if “sin taxes” are problematic so to are the alternatives. Many states have chosen to raise taxes on cigarettes and other products in recent years because of the massive budget deficits they face. One might suggest that instead of taxing these products the government should look towards other means of raising revenue. But other types of taxes raise all new kinds of moral issues. Or maybe it is better to simply slice government budgets without raising taxes, but then we have to consider the morality of cutting valuable government programs. One might be left to wonder that even if “sin taxes” are far not ideal, in some cases they might be the best of a serious of imperfect options.
-Luke
Related posts:
- Paying people to be healthy
- Taxes and tyranny
- Do we have a right to harm ourselves?
- Why should we regulate tobacco?
- Tea Partyers for Medicare
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[...] few weeks ago I explored whether we should subsidize healthy habits and tax unhealthy ones. In the post, I quoted Harvard [...]