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Is a Fat Tax the Solution to California's Economic Woes?

Americans are fat, and they are getting fatter. A recent study by the Urban Institute and the University of Virginia says that unless consumption patterns change, 40 percent of the country's population will be overweight or obese by 2015. Even here in the Golden State, where body image is so important that people pump themselves full deadly poisons like Botulinum Toxin just too smooth out their wrinkles, nearly 60 percent of adults are overweight or obese, according to a 2006 study by Chenoweth & Associates for the California Center for Public Health Advocacy.

The L.A. Times reports on the economic impact of obesity on the California economy.
The L.A. Times reports on the economic impact of obesity on the California economy.

All those belly rolls amount to a huge problem. And one solution being bandied about Washington is the so-called "fat tax" proposed by the Urban Institute--a 10 percent tax levied on sugary drinks and other "food" items of little nutritional value. A similar tax was proposed in California in 2002, one that would have added four cents to the cost of a can of soda in an attempt to promote a healthier lifestyle for kids. It was squashed.

But consider the costs: In California, our recently resolved budget deficit was a mere $26.3 billion, while the estimated cost to the state for obesity, overweight and inactive adults was $41 billion. The cost of obesity to Los Angeles County alone is $11.9 billion, nearly seven times this year's budget cuts to the Los Angeles Unified School District. The numbers are equally staggering on a national scale--according to the Centers for Disease Control and Prevention, the medical costs associated with treating obesity-related diseases reached $147 billion nationally in 2008. A 10 percent tax on fattening foods could yield $500 billion to the country's coffers over the next decade.

Some argue that a 10 percent tax wouldn't be costly enough, while others say the tax could be as beneficial as the collective action, which included heavy taxes on cigarettes to help curb smoking. There are those who argue that the tax would be too regressive, and even those who say it might have the unintended consequence of getting people to exercise even less, because they're spending so much time cooking.

But the authors of the Urban Institute study believe the benefits of such a tax far outweigh the risks. "According to a study comparing states that repealed taxes on soft drinks and snack foods with states that retained such taxes, the repealing states were 13 times more likely to have a high relative increase in obesity." They go on to suggest that a portion of the revenue collected could be used to subsidize the cost of fresh fruits and vegetables, to help the lower-income families most likely to be affected by obesity and the tax.

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