With the exception of people living in the backwoods with their roofs covered in solar panels and properties protected by leach-ridden moats, most Americans can see some benefit to taxation. Without it, no other sustainable source of funding for road repairs, social programs or education has been implemented. So, taxation is nothing new – and nothing that can't be justified, in moderation.
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And for centuries, governments have been influencing their constituents' personal behavior through taxation, restrictions and fines. Tobacco, alcohol and other drugs, like marijuana, obviously fall into this category. But what makes those substances more hazardous to our physical and mental health than sugar, fast food or even reality television? Or, has legislation just not caught up with these consumption trends yet?
If taxes are meant to persuade people into making wiser health decisions (as many believe), cases can be made to enforce harsher levies on everything from tanning beds to cell phones. So, where is the line between personal freedom and the good of society?
- Spilling the Salt
Too much salt is not good for you – we can all agree on that. Running with that idea is New York Democratic Assemblyman Felix Ortiz. Ortiz's battle to introduce legislation banning salt as an additive in restaurants has drawn international attention from both sides of the political scale. Even New York City Mayor Michael Bloomberg (who has been known to straddle both the left and the right, politically) called the proposed bill "ridiculous."
This isn't the first time salt consumption has been under scrutiny, however. Major territories, like France, have imposed salt taxes in the past. India even used its widely unpopular salt tax to stage nonviolent protests against its governing body.
The medical community is somewhat split on salt prohibition, as well. It has been proven that excessive salt can cause major cardiac issues, but studies also show that low- or no-salt diets can have a similar reaction in an impressively large section of the population. This is especially true in those known to be hypertensive. (Politicians are big on creating taxes, but they're not always big on paying their own. Learn more in Politicians Who Skipped Out On Taxes.)
- Carbonated Beverage Tax
Much like Ortiz's salt restrictions, the proposed carbonated beverage tax was placed on the table in the hopes of improving New Yorkers' diets and punishing companies that produce unhealthy products. Retailers and restaurants providing the beverages – which include soda and energy drinks – will be forced to pay an extra tax to the government. That tax will naturally be passed on to the consumer.
New York Governor David A. Paterson brought this proposed penny-an-ounce tax to national headlines last year, and has since been working to reinforce the dangers of sugared beverages. Patterson's reasoning is twofold:
- New York's debt is currently $15 billion, and increasing taxes would help reduce those numbers by an approximate $400 million per year, if the tax is approved.
- Dubbed the "Obesity Tax," Patterson's carbonated beverages levies would encourage New Yorkers to make better nutritional decisions. Analysts have estimated that consumption of these drinks could reduce by 15% within one year.
It doesn't take a hippie conspiracy theorist to realize that this tax has the potential to eventually spread to fast foods, snack foods and other "sinful" favorites, much to lobbyists' chagrin.
- Credit Where Credit is Due
Not all tax policies are implemented in order to make you stop living an unhealthy lifestyle – unless you consider self-reliance and financial free will unhealthy. Child tax deductions are another form of behavior modification, by easing the monetary blow of parenthood, and thus, encouraging you to have kids, in the hopes that they eventually help sustain the economy. The tax credit is based on the number of children in the household. Essentially, the rule of thumb is $1,000 per child, per year.
Marital status and income limits also play a major role here – the allowable tax credits are determined by your tax-filing status (joint, single or filing separately) and income. In itself, that's another form of behavior-modifying tax law. So what are you waiting for? Uncle Sam wants you to get out there, meet the perfect mate and start reproducing. Do it for your country.
- Trickle-Down Taxation
When Ronald Reagan re-introduced supply-side (see: trickle-down) economics, one of his hopes was that a decrease in marginal tax rates would encourage those in higher tax brackets to eventually trust their monies in business foundations and high-risk, high-yield investments – thus, creating jobs and reducing corporate debt. The program was heavily disputed, and increased the political, financial and economic gap between the upper, middle and lower classes, as Medicare and Social Security taxes increased.
During Reagan's presidency and after the 1982 recession, the unemployment rate dropped from 9.7% (oddly, where it stands again today) to 5.3%, according to the Bureau of Labor Statistics. Whether it truly played a factor in this decline will likely be debated until we have the technology to bring The Great Communicator back and ask him for ourselves.
The Frog in the Boiling Water
There are two elementary approaches to taxation: subtlety, and with an iron fist. Citizens are usually more comfortable with subtle taxation – slowly increasing the numbers, so as to avoid panic and revolt. In the case of the carbonated beverage and salt regulations, urgency and guilt are being used as scare tactics - even though the proposed rulings may have honorable intentions. This would more than frustrate the Controller General of Finances to King Louis XIV, Jean-Baptiste Colbert, as he stated: "The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing." Of course, he was also known for having tax evaders punished in the pillory and even killed – so he may not be the best to quote in this situation. The aforementioned behavior-changing taxes are at least more subtle than Colbert's tactics.
If you're still feeling uninformed, check out last week's business highlights in Water Cooler Finance: My iPad Beats Your Toyota.