Would a Free Market Need Sin Taxes?

A new poll by Rasmussen found that 56% of Americans oppose sin taxes on sodas and junk food. The only thing surprising about that statistic is that it isn't higher. When pollsters ask questions involving more taxes -- no matter the details -- Americans tend to be strongly opposed. As Rasmussen breaks down the poll, however, it becomes even clearer how politically toxic a sin tax on unhealthy foods might be. But if the health care system embraced the free market, sin taxes wouldn't be necessary.

The poll also reveals:

Only 17% believe the state and national politicians who favor sin taxes are more interested in public health than in finding another source of revenue for the government. Seventy-three percent (73%) say sin tax supporters are more interested in raising additional money for the government.

Ah, political cynicism: I know thee well. Moreover, Rasmussen finds 86% of people say it's not the government's responsibility to control what people eat. And I agree. Yet, a fair portion of that 86% does want the government to have some control over health care. But if the government cares about your health in reactive treatment circumstances, then shouldn't it also be concerned with preventative care? Americans want to eat their cake and have others pay for their medical care for it making them fat too.

I think obesity is a huge problem in the U.S., but I tend to eat obsessively healthily. That's my choice, which I believe is a rational one, because I'd rather live a long, healthy life. Yet, it may be irrational in the context of the current insurance-based health care system. In a setting where the government plays an even greater role in paying for health care, it's even less rational. The less direct responsibility I have for my health care costs, the less I should bother trying to be healthy. I can eat delicious, decadent foods as much as I like, and the cost of care from associated medical problems will fall on others, not me.

If everyone had to pay their medical costs directly, then there would be a much greater incentive to try to eat healthily. But as long as insurance companies broadly cover everybody with similar premiums -- or worse if government fully universalizes health care -- then suddenly there's a moral hazard to eat whatever tastes good, because a poor eater's excessive health care costs won't be paid by him anyway.

In a freer market, you wouldn't need sin taxes on food, because the higher cost for eating unhealthily would have to be paid by individuals who choose that lifestyle. Those foods would be far less popular and obesity would decline.

If the government does want to play a role here, it should be in regulating the disclosure of foods' health statistics and ingredients. But as far as I can tell, that's pretty adequate at this time, though it could be better at some restaurants. You can try to correct too much government involvement in the market with even more, but wouldn't it be easier to just let the market work?