Save Us From Ourselves!

New York Times: Can a Soda Tax Save Us From Ourselves?

In this great summary, renowned economist Greg Mankiw lays out the libertarian case against soda taxes and the nanny-state mentality behind them:

Sometimes, advocates of “sin” taxes contend that consumers of certain products impose adverse budgetary externalities on the rest of us — that if the consumption induces, say, smoking- or obesity-related illness, it raises health care costs, which we all pay for through higher taxes or insurance premiums.

Yet this argument has a flip side: 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.

It may seem grisly to consider the budgetary savings of an early death as a “benefit” to society. But when analyzing policy, economists are nothing if not cold-blooded. If one uses budgetary costs to justify taxing particular consumption goods, the accounting needs to be honest and complete.

Even when there aren’t any negative externalities, there’s a new intriguing concept in economics: Your present self might hurt your future self.  And that’s when government should step in, right?  To stop us from hurting ourselves?

IF this is indeed the best argument for “sin” taxes, as I believe it is, we are led to vexing questions of political philosophy: To what extent should we use the power of the state to protect us from ourselves? If we go down that route, where do we stop?

Taxing soda may encourage better nutrition and benefit our future selves. But so could taxing candy, ice cream and fried foods. Subsidizing broccoli, gym memberships and dental floss comes next. Taxing mindless television shows and subsidizing serious literature cannot be far behind.



  1. Dr. Pepper PHD says:

    This is ludicrous.

  2. Anonymous says:

    Gaining weight and losing chances ‘with the ladies’, now THAT’S taxing.
    Uncle Sam is becoming a perverted voyeur. Quit looking at my belt.

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