We Should Have Higher Taxes!

 

Don't get me wrong here. I don't like paying taxes any more than anyone else does. Especially when I see how the government spends my money for me. But I am starting to warm to the idea of targeted consumption taxes intended to place the burden of societal costs on those who create those burdens.

Let's consider cigarette smoking as one example. In the United States, cigarettes are taxed at both the federal and state levels, in addition to any state and local sales taxes and local cigarette-specific taxes. There is no doubt that this is burdensome upon and unpopular among smokers. In New York State for example, a pack of cigarettes costs about $10 and roughly half of that cost is taxes. 

But here is the thing. Smoking imposes a very high cost on society, and I am expected to pay that cost through my own taxes, even though I don't smoke. Cigarette smoking cost the United States more than $600 billion in 2018 alone, including:

• More than $240 billion in healthcare spending
• Nearly $185 billion in lost productivity from smoking-related illnesses and health conditions
• Nearly $180 billion in lost productivity from smoking-related premature death
• $7 billion in lost productivity from premature death from secondhand smoke exposure.

As high as cigarette taxes may seem to smokers, in fact they raise less than $12 billion a year, leaving the other $588 billion for you and I to pay.

A consumption tax like that on cigarettes shifts at least some of the tax burden from society to those who create the costs through their consumption. No one is forced to pay this tax; no one is forced to smoke. Nor are they forbidden from doing so. They are just asked to contribute more to the costs their choice imposes on me.

This brings me around to my point (at last!). While tobacco use indeed imposes a steep cost on society, it pales in comparison to the costs imposed by over-consumption of sugar. A 2013 report estimated those costs as "in excess" of $1 trillion annually. Now, unlike cigarettes, I do consume sugar so taxing it would affect me directly. But I DO have control over how much of it I choose to consume. And in any case, if I think smokers should be financially responsible for the damage caused by their consumption of tobacco then I should also be help to account for the cost of my sugar habit.

Over 100 countries impose taxes on sugar already and have seen reductions in consumption as high as 30%. Such a reduction in the US would have huge and favorable impacts on rates of diabetes, obesity, heart disease and some cancers with concurrent reductions in healthcare spending. No one would be forced to stop consuming sugar and sugary products, only to pay more for the costs they are imposing on others.

When it comes to sugar, we should have higher taxes.