Monday, May 09, 2005

Detroit's fat tax proposal

Sometimes a bad idea can start a good conversation. The mayor of Detroit recently proposed a 2 percent tax on fast food, beyond the 6 percent tax that restaurant customers already pay (see, for example, AP this morning). The idea is to help the city budget and address a public health problem at the same time.

First, who is going to figure out exactly what food counts as "fast" food? What about very high calorie sit-down restaurants? What about healthy offerings from fast food restaurants? What new government office will decide these issues? Readers of U.S. Food Policy already know this weblog shares an economist's typical skepticism of new government bureaucracies meddling thoughtlessly in markets.

Second, where's the justice? In principle, governments may use price policy interventions to address market failures and then use income policies to deal with any unwanted distributional consequences (such as making the poor more poor). It sounds like the Detroit mayor missed the second half of this plan.

Third, how can you become mayor of Detroit without any political sense? Taxes are unpopular! Government meddling in personal decisions is unpopular! The obesity issue merits a public policy response, but there is a hierarchy of options. First, try improving consumer information about restaurant offerings, empowering the public to make its own free choices even better. Second, protect our children at school, because the schools already serve in loco parentis, so care for the children's health is more defensible. Taxes are so far down the list of options, that quite possibly they should never be reached (see USDA economists Fred Kuchler and Elise Golan on the strengths and weaknesses of various economic arguments for obesity interventions).

The AP article was pretty tough on the mayor's tax proposal, but even the quotes from opponents sure made it sound like somebody should do something:
“Just tell him we’re going to go to Bloomfield Hills to McDonald’s if he puts a tax on it,” said 18-year-old Ebony Ellis, referring to an affluent Detroit suburb, as she and four friends ate at a Golden Arches in Detroit. The high school classmates eat at McDonald’s every day after school because their schedule doesn’t leave them time for lunch.

It's just that the SOMETHING probably isn't a tax.

Other weblogs that have covered this issue, from across the political spectrum, include: Fast Food News, GOP bloggers, Electablog, Say Anything, Take Back the News, Hit & Run.

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