Friday, October 07, 2005

Jacob Sullum on Cigarette and Fast Food Taxes: "The Tyranny of Public Health"

At a September 28 talk in Toronto sponsored by the Montreal Economic Institute, entitled "Tobacco Today, Fast Food Tomorrow? The Tyranny of Public Health," Jacob Sullum, senior editor of Reason magazine, compellingly raises questions about the use of the argument that government policies, such as those which raise taxes on cigarettes, can be justified on the grounds that these individual behaviors increase societal health care expenditures and that the policies create inventives for individuals to change their behavior.

Sullum asserts (I think quite correctly) that two of the primary justifications used by anti-tobacco advocates in promoting cigarette taxation as a public health policy is that smokers produce higher health care costs, both for the government and for other taxpayers, because of the health impact of their personal choice to smoke and that increased taxes will encourage these smokers to quit. This same justification is also used by some anti-smoking advocates to justify their support for workplace policies that make not smoking a condition for employment (see any number of posts on this blog to see this).

But as Sullum then notes, the same argument can and is being used to support taxing fatty foods or more directly, taxing people who are overweight. As Sullum points out:

"A 2003 study in the journal Health Affairs estimated that the health care costs associated with excessive weight amount to something like $93 billion a year in the U.S., half of it covered by Medicare and Medicaid. 'If people want to be 200 pounds,' said the study’s lead author, Eric Finkelstein, 'then that’s their choice. But ultimately, if the taxpayer is paying for those choices...that is where the justification for government involvement comes from.'"

Sullum notes that in 1994, R.J. Reynolds took out an ad critical of proposals to increase cigarette taxes, asking: "Today it's cigarettes. Will high-fat foods be next?" While many anti-smoking advocates simply dismissed that argument by claiming it was frivolous, it only took six months until an op-ed in the New York Times (see: Brownell K. Get slim with higher taxes, December 15, 1994) proposed the idea of a tax on fatty foods.

Sullum asks us to think about using the desire to reimburse health spending or to encourage altered behavior as a justification for smoker taxation and restrictive employment policies by extrapolating from this argument to the obesity issue. He asks: "Instead of taxing ice cream and cheeseburgers, which are consumed by the thin as well as the fat, why not tax people for each pound over their ideal weight? That would impose a fee proportionate to the burden they are imposing on taxpayers, and it would create a direct incentive to lose weight."

The logic of the argument is appealing: if one finds the idea of taxing fatty foods or taxing people for being overweight to be repellent, then doesn't that also bring into serious question the validity of the justification for using a sin tax (or restrictive employment policies) on smoking to reimburse excessive health care spending or to incentivize smokers to change their behavior?

Sullum doesn't leave it there. After all, the same logic can be extended to almost any personal behavior choice that leads to increased health care spending: "The argument that people covered by government-funded health care have a duty to keep fit also proves too much in the sense that it can be extended to anything that carries a risk of disease or injury. If eating and exercise are legitimate targets of regulation, so are sex, hard work, sleep, stress, dental hygiene, and a wide range of recreational activities. Here taxpayer protection converges with public health protection, if public health is understood as the combined health of the collective."

The Rest of the Story

Is there any way we can wiggle out of this predicament, outside of relying upon a different justification for increased cigarette taxes and restrictive employment policies (i.e., different than the need to recover health care/taxpayer expenditures or the desire to incentivize smokers to change their behavior)?

The first possible way to escape would be to argue that the idea of taxing people who are overweight, taxing fatty foods, or taxing people who do not get enough exercise, etc. is not abhorrent after all.

I think this argument can be easily dismissed as being unreasonable and repulsive. I don't for a minute think that government should get into the business of taxing people who are overweight, do not get enough exercise, etc. And the same distaste for such an approach also applies, you will note, to restrictive employment policies. Certainly, I find abhorrent, for example, an employment policy that would refuse to hire obese people for reasons not directly related to job performance.

A second possible way to escape would be to argue that while people can easily make a decision to stop smoking, they cannot so easily reduce their weight or change other aspects of their behavior - and so that's why it is acceptable to tax cigarettes and not hire smokers while it is unacceptable to tax and not hire people who are obese or do not exercise.

This argument, however, is not supported by the facts. If anything, the addiction of nicotine is far stronger than any possible compulsive pull that behavior like eating fatty foods or not getting exercise has. And while losing weight can certainly be difficult, it is not impossible. Quitting smoking is perhaps the most difficult change in behavior to make: all one needs to do is consider the fact that a huge percentage of smokers who undergo lung cancer surgery continue to smoke after their surgery.

A third possible escape would be to argue that the health and economic impacts of smoking so far outweigh the impacts of other behaviors that taxation and discriminatory employment practices are justified for this single behavior.

Unfortunately, this doesn't seem to be supported by the facts either. The health care costs of obesity, according to a recent article, may actually exceed those of smoking.

The fourth, and last possible escape I can think of, is to argue that smoking per se is not being taxed, but that it is a tangible product that is - cigarettes. In most of the other examples of taxing a behavior, there is no tangible consumer product that is being taxed directly. The only exception is fatty foods, but one could argue that since fatty foods are not directly and inevitably tied to obesity or disease, taxation of fatty foods makes no sense anyway.

Before addressing this argument, I will first note that regardless of its potential validity, it does not provide a justification for employment policies that fire or refuse to hire smokers. Because in those cases, it is truly the behavior, not the sale of the tangible consumer product, that is being regulated.

As far as the validity of the argument, it seems to have some promise since none of the other behaviors (with the exception of fatty foods) does indeed represent an actual consumer product whose sale is being regulated and taxed, rather than whose potential outcome is being regulated or taxed. Is there any other legal consumer product on the market that directly and inevitably causes health damage and increases the risk of disease? There are certainly other consumer products that are dangerous, but I'm not sure I can think of any that inevitably lead to some health damage. For example, even smoking a small number of cigarettes can be shown to produce meaningful and measurable deteriorations of pulmonary and cardiovascular function.

I think, then, that the argument does have some validity and that it could potentially provide at least some rationale for why a sin tax on cigarettes might seem palatable while a similar tax on other personal behaviors that may have severe impact on health care costs does not.

However, I think that two points deserve emphasis here.

First, it is not clear to me that most anti-smoking advocates are using this argument as the justification for their proposed tax policies. Even if this escape does avoid the problems of the slippery slope argument, you have to invoke the argument, I think, to garner some protection from it. If anti-smoking advocates want to continue to single out cigarettes as the only consumer product that they feel is deserving of ever increasing taxation in order to recover health care costs and encourage people to change a health-related behavior, then they need to admit that and explain why they are putting cigarettes in a category of its own.

But along with that comes an obligation - and that obligation is to not then go ahead and treat other behaviors or products in the same category as cigarettes. So when tobacco control advocates proceed to support litigation based on damages caused by fast food companies, it completely undermines the cigarette taxation justification because it reveals that those advocates do not indeed view cigarettes as being in a category by themselves.

Ironically, I think that by trying to extend the rationale for taxing cigarettes and holding cigarette companies responsible for damages to other products and other companies (i.e., fast food companies), public health advocates (and especially tobacco control practitioners) decimate their own argument for increasing cigarette taxes. And since these lawsuits have apparently not been successful and I don't think fatty food taxes are going to see the light of day, these advocates are, I think, actually killing two birds with one stone. They're not advancing any meaningful social policy regarding the problem of obesity, yet they're destroying any possible justification for any increased taxation of cigarettes.

So basically (and based on my observations of what is going on in public health today), I think that Jacob Sullum's argument holds up. It certainly holds up completely with regards to employment policies regarding off-the-job smoking. And while there is a slight crack in the argument that might otherwise allow public health advocates to rationalize why smoking is to be treated uniquely, by virtue of the broad recent focus on treating obesity in the same way as smoking is being treated, that crack has essentially been sealed over. The fact that it has been, in some cases, anti-smoking advocates themselves who have sealed over the crack I think makes it that much more difficult to scrape out the cement from the fissure.


Anonymous said...

Most of the nearly 25% decline in US cigarette consumption since 1997 can be attributed to price increases, the overwhelming majority of which were due to the MSA and 4 other state settlements, and to cigarette tax hikes.

Since this blog exposes cases of hypocrisy by public health advocates, its important to point out that someone who rails against the most effective smoking reduction interventions is hypocritical for calling himself a public health advocate.

Michael Siegel said...

I think you are making some overly simplistic (and flawed) arguments.

First, you are suggesting that since the MSA led to increased cigarette prices and was a major factor in the 25% decline in cigarette consumption, anyone who opposes it or disapproves of it must not be a public health advocate, since to do so would be hypocritical.

I take strong issue with that. All in all, I think the MSA was a disaster for public health, and if you take a broader view than just looking at the price increase, I think that it has had detrimental effects on public health that far outweigh any impacts on cigarette consumption through price.

To suggest that opposing the MSA is hypocritical because it was a most effective smoking reduction intervention is quite narrow-minded, and I think such a view would end up leading to disastrous consequences for public health.

Second, you are suggesting that anyone who opposes any public health intervention that is effective, regardless of whether it is ethical or not, is not a public health advocate. I strongly disagree. I think there are other factors that must be considered in addition to just the effect that a measure would have on cigarette consumption or other behaviors.

For example, we could certainly reduce smoking to unprecedented proportions if we simply passed a national law requiring that you had to be a nonsmoker to be employed. The incentive not to starve to death would be quite strong, I think, and it would be a great deterrent to smoking. But I don't think that someone who opposed the policy on ethical grounds would be, by definition, not a public health advocate.

I think there's room in the world for more than one view on particular issues, beyond just your own. And not everyone who disagrees with you is by definition, not a public health advocate.

Is it not possible that some are taking a broader view than you are, and that in the long run, sacrificing the long-term importance of not creating a partnership between the states and Big Tobacco might have outweighed the short-term importance of increasing cigarette price and reducing consumption for a few years?

Finally, you don't seem to follow the complexity of my argument, since I am in no way simply "railing" against cigarette taxes. The argument is richer than that - I am essentially questioning the rationale for increasing cigarette taxes and asking us to re-examine our arguments in light of Sullum's interesting article.

In fact, I think I have offered a quite profound defense of this policy intervention, but it would require a change in the way this issue is viewed by tobacco control and public health practitioners. That doesn't seem possible, since most practitioners, I think, take as narrow-minded a view of the issue as you seem to.

Sorry for being so harsh, but I don't take lightly to having my integrity as a public health practitioner questioned publicly with absolutely no logical argument to back up the attack.

Mrs. Non-Gorilla said...

mike -- a few points, as well as my own opinions (my own opinions first):

i have no problem with taxing cigarettes, as it is a proven method of both raising revenue and reducing smoking (both prevalence and quantity smoked). nor do i have any problem with private employers instituting policies related to smoking, exercise, or weight (although there may be a statutory problem with the third, if obesity falls under ADA protections).

i also don't really object to taxing fast food, and i think that is different than taxing people who don't get enough exercise. if nothing else, the administrative costs of taxing people who don't get enough exercise would be prohibitive. also, the distiction between taxing a product and taxing a behavior (or lack thereof) holds.

so: taxing cigarettes and taxing fatty foods, no problem (for me).

now, on to the points re: this entry:

1. while an individual might find employment policies which discriminate against fat people abhorrent as well as government policies which tax fatty foods or fat people, that isn't a terribly nuanced position. a libertarian, for example, could easily argue that the latter is undesirable, but the former, highly desirable. market forces will reveal whether employment policies affecting fat people (or smokers) is an efficient way of reducing health costs.

2a. litigation against fast food companies for harms caused by their food should only be compared to litigation against tobacco companies for harms caused by cigarettes if there is reason to believe that the fast food companies engaged in tobacco-industry-like behavior, such as knowingly marketing food that their own research had shown to have excessive health risks; forming a cabal to hide such research from the public or to claim that such research did not exist; engaging in deliberately deceiving marketing campaigns to minimize the effect of increased health awareness, and so on.

if fast food companies did not engage in such behavior, it would be difficult to put on a prima facie case for an intentional tort on the part of the fast food industry. perhaps you could go after them for failure to warn, but again, i'd want to see evidence that they deliberately obscured scientific debate.

2b. taxation follows taxation and litigation follows litigation. the rationale for taxing cigarettes can be extended to taxing fast foods if there is a similar (or better) price elasticity of demand, as well as similar (or better) public medical cost savings; the rationale for extending tobacco litigation theories to fast food litigation only makes sense if there are similar facts as i stated above.

benpal said...

jenny: sorry, but coming from another country and another culture, you also seem to be narrow-minded and blinded by a culture which weighs everything in money.
You say: "fast food companies for harms caused by their food" Why does their food harm, and the buiscuits, hamburgers and cheese sandwiches which you prepare yourself at home wouldn't?
Have a look at other cultures and lifestyle where eating out is an exception rather than the rule. Maybe all this nation has to do is to change its value system.
Taxing fast food (whatever that means) means giving extra money to the government. What for? So the can quarrel over who gets the bîggest piece of cake (like some of tne tobacco control groups are doing over the RICO money?).

benpal said...

anonymous: "Most of the nearly 25% decline in US cigarette consumption since 1997 can be attributed to price increases" Are you guessing or do you know?

benpal said...

If health cost is the sole criteria for taxing, ditch social security and have everybody pay for his/her own treatment. Sorry for anonymous, but there is no guarantee that you will not have an accident or a cancer one day, even if you don't smoke. In that case, you are on your own.
Just as an example on how unfair some of these arguments can be: My father smoked his whole life, never needed a doctor except for may a flu, never went to a hospital, died at the age of 82 in his bed without being ill.
My mother in law smoked for 40 years before giving up. She never went to a hospital except for an infection and a few months ago for eye surgery. She is over 90 now, and in good shape. They both paid social security all their life plus taxes on cigarettes ... Maybe some non-smoker gets the benefit of it ...

Mrs. Non-Gorilla said...

benpal: read for content, dear. i was discussing the legal foundation for suing fast food companies, and set forth a very narrow situation under which i thought there would be any grounds for doing so.

btw, you have no idea what country i come from or what my cultural background is, so i'd suggest you not try ad hominem attacks on those bases.

norbert hirschhorn said...

It is a discussion we've had before Michael, but for this string I again cite that most libertarian or economic thinkers, John Stuart Mill, "On Liberty," Chapter 5:

"But it must be remembered that taxation for fiscal purposes is absolutely inevitable; that in most countries it is necessary that a considerable part of that taxation should be indirect; that the State, therefore, cannot help imposing penalties, which to some persons may be prohibitory, on the use of some articles of consumption. It is hence the duty of the State to consider, in the imposition of taxes, what commodities the consumer can best spare; and a fortiori, to select in preference those of which it deems the use, beyond a verey moderate quantity, to be positively injurious. Taxation, therefore, of stimulants, up to the point which produces the largest amount of revenue (supposing that the State needs all the revenue which it yields) is not only admissable, but to be approved of."

To argue that smokers do or do not cost the community more by smoking or dying sooner is completely beside the point (a World Bank analysis suggests it may be a wash). The point is that by a legal quirk an industry is legally able to sell a product that injures the majority of its users at any level of use, and also many non-using bystanders. Surely, by Mills's formulation, this "article of consumption" deserves to be taxed and a rate that will induce persons to stop buying the product.

Do fast foods meet the same criteria? In my opinion, not to that degree, and there are many other incentives to improving the healthy quality of foods. The best example is the gradual elimination by food companies of tran sfats, based on public knowledge and consumer preference.

Holst said...

Jacob Sullum is a tobacco creep, pure and simple. He spouts the lies of the tobacco people and helps them carry on their murder and genocide, pushing an ILLEGAL drug. Yes, tobacco is ILLEGAL - it is illegal to poison people, no matter how slowly you do it. ALong with the tobacco people, Sullum should be brought up before a Nurnburg-style council and charged with wholesale murder of the world's population. Smokers are deprived of their true right to a product which is not addictive, defective and lethal, when used as intended. Hundreds of thousands of INNOCENT people around the world are killed each year because they were exposed to toxic tobacco smoke. More murder and genocide, courtesy of the tobacco criminals.

Michael Siegel said...

What you offer is, I think, a reasonable argument for cigarette taxation for fiscal purposes. But I would just note that the argument you offer is not the one that is being used by most tobacco control advocates, who are instead focusing their justification for these policies based on the desire to recover health care costs for the government and taxpayers and to attempt to change individual behavior.

My post, more than anything, was intended to challenge the reasoning behind cigarette tax policies, rather than to opine on the merit of such policies. And as I think you are pointing out nicely, the health care cost argument is probably not a reasonable one. I think what the Sullum article did for me, most of all, was to force me to critically assess the different justifications that we tend to use to support cigarette tax policies. And some of them don't seem to hold up, at least along the lines of argument that are most often offered by anti-smoking advocates. I'm not suggesting in this post that the only approach is to abandon support for increased cigarette taxes. Another approach would be to use valid arguments for such policies. But those arguments, I think, require a re-thinking of the way in which public health and tobacco control are being practiced. And that's the chief implication of my post.