With a national deficit approaching $1.5 trillion, it's hard to disagree with the notion that something must be done to alleviate the burden. But when new taxes are suggested, most of us cry foul. However, taxes are an effective way of raising capital, and taxing "sin" products can have the added bonus of discouraging behaviors that may cost the healthcare system later on. The classic examples are taxes on cigarettes and alcohol. But they aren't the only ones. (Learn more about behavioral taxation in Taxes Are Controlling You.)
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Obesity has reached epidemic proportions in the United States with nearly 34% of adults and 17% of children – three times the numbers from 30 years ago – classified as obese, according to the New York Times. The cost of chubby to Americans is estimated to be anywhere from $132 billion to a projected $340 billion in years to come. A study published in the American Medical Association's Archives of Internal Medicine in March suggested an 18% surcharge (fee or tax) on pizza could be the next line of defense against growing debt and growing waistlines.
The study also proposed that same tax be applied to sugary drinks. Taxes on drinkable sweets (not just soda, but Gatorade and high-sugar juices as well) have been proposed in New York, and implemented in California and Philadelphia. It ranges from one cent per teaspoon of added sweetener to two cents per ounce of liquid. (Soda contributes to obesity, tooth decay and bone loss. Will taxing it help alleviate the strain on the healthcare system? Find out more in Soda Tax: Penalizing The Pudgy.)
The tax could potentially result in an estimated weight loss of five pounds per person per year, according to the study.
Tattoos and Tanning
As of July, those who visit indoor tanning salons will be subject to a 10% tax as part of the Obamacare plan. In Minnesota, The Coalition of Greater Minnesota Cities has proposed extending the state sales tax to include tattoos, body piercings, manicures, facials and digital downloads. In September of 2006, New Jersey extended their sales tax to include tattoos, tanning, nail salons, limousines and memberships to country clubs and gyms.
Taxing what some politicians have labeled "luxury" or "optional" services brings in much-needed funds in order to balance the government budgets. (Learn how luxuries can cost you in Stop Keeping Up With The Joneses - They're Broke.)
Taxes for Purpose
While no one likes the idea of paying an additional 12 cents per can of soda, the benefits of these levies have the potential to outweigh the hit to the pocketbook. Good health is truly priceless, and if this tax deters even a few people from choosing pizza over a healthier dinner, it could be worth it. However, it is more likely that the levels of consumption of these products will remain relatively stable, in which case, at least part of our "sinful" indulgence will go towards funding public projects.
Check out last week's business highlights in Water Cooler Finance: My iPad Beats Your Toyota.