I'm probably preaching to the choir here, but the federal excise taxes on liquor and tobacco have always been pet peeves of mine.
I do not know if an additional tax on beverage alcohol products is part of any health care plan now before Congress, or whether Bush is likely to recommend one. Clinton mentioned such an increase in interviews, and increasingly health care costs are the justification for higher beverage alcohol taxes.
You would think the beverage alcohol industry would universally and unconditionally oppose excise tax increases as a matter of principle but, in fact, the industry often splits on this issue. Wine makers try to distance themselves from brewers and distillers -- particularly distillers -- in an effort to carve out an exemption for themselves using the familiar but specious "wine is food" argument.
The argument in favor of "unhealthy products" taxes is simple and superficially attractive. Tobacco and alcohol are unhealthy, therefore their use increases health care costs. Higher taxes are justified to help pay for health care expenses caused by these products and borne by government programs such as Medicare and Medicaid. In this way, tobacco and alcohol users pay for the consequences of that use, much as drivers pay for highway maintenance through gasoline taxes.
Higher taxes also cause prices to go up, thus discouraging consumption and reducing the associated health care costs.
The logic of taxing "unhealthy" tobacco and alcohol products to pay for health care is wrongheaded for two reasons. First, both product categories are already taxed outrageously. The current Federal Excise Tax (FET) on spirits adds more than $2.50 to the price of a 750 ml bottle of 80 proof whiskey. Here in Chicago, that's 30% of the retail price for a popular brand like Jim Beam, Ten High or Early Times, before the addition of local taxes. Second, singling out tobacco and beverage alcohol products suggests that they are the only legal products with adverse health consequences, which is far from the case.
For example, doesn't the logic of an "unhealthy products tax" suggest there should be massive new taxes on handguns? Like federal cigarette and beverage alcohol taxes, it would be levied on manufacturers and thereby become part of the price each time the piece changes hands, even extra-legally. The argument would be that handgun sales impact both law enforcement and health care. The Second Amendment does not say that the right of the people to bear arms shall not be taxed.
In the health care arena, how about massive new federal taxes on the beef, pork and dairy industries, for example? Their products are high in saturated fat, which causes heart disease, still the leading killer in the U.S. It is estimated that one million Americans a year die prematurely as a result of consuming too much fat and cholesterol.
We have to eat, you argue, while we don't need to drink or smoke. Okay, fair enough, but we don't need to eat ice cream to sustain life, and ice cream is just about the most concentrated source of saturated fat you can find. Why not add a federal "health care" tax to Ben & Jerry's, Baskin Robbins and other frozen desserts? Alcohol taxes are based on proof, they'll probably base the ice cream tax on percentage of butterfat.
In theory, it should work the same way: tax unhealthy foods (i.e., foods that are high in saturated fat) to make them more expensive, so people will eat them less often, thereby being forced to eat healthy foods (grains, vegetables, legumes, etc.) more often, thus becoming healthier and using less health care.
In addition to ice cream, let's tax McDonald's, Dominos Pizza, etc. Why not all tax fat grams? Any food that contains saturated fat will be taxed so much for each gram of fat in the final, packaged product. As with alcohol, the tax will be considered as owed when the product is manufactured, not when it is sold. That means all promotional samples and goods that have to be sharply discounted for some reason will still be taxed the same amount as goods sold for full price.
How about coffee? Necessary for life? Unhealthy? How about soft drinks? They have no positive nutritional value but contribute to health care problems ranging from tooth decay to morbid obesity?
I am not advocating such taxes, of course. I am simply saying that if we are going to tax "unhealthy" products to pay for health care, then let's tax all "unhealthy" products equally. Why is it appropriate to single out tobacco and alcohol?