Fat Tax


Obesity is becoming increasingly a major issue in the U.S. thereby necessitating a swift intervention by the government to bring the menace within controls. This paper will apply certain microeconomic concepts in conjunction with a cost-benefit system to investigate the impact of fat tax. The concept relevant to this theme involves, the rational and irrational decision-making regarding obesity-related consumption choices.

Challenges of obesity

According to the statistic of the U.S. Department of Health and Human Services (31), adults of age between 20 and 74 the incidence of obesity has increased from 15% to 27% between 1980 and 1999. Moreover, 1999 saw 13% of children aged between 6, and 11 and 14% of teenager indicate a body mass index between 25 and 30. Typically, overweight individuals have increased risk of developing diabetes (Southworth 41).

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In the U.S. a rise in the incidence of diabetes signifies a health crisis as well as financial crisis. For instance, in 2000, the federal government invested a total of $117 billion on issues related to obesity. Worth noting, the mortality attributed to obesity is approximately 300,000annualy (U.S. Department of Health and Human Services 5- ).

The above mentioned cost, encompass medical expenditures and decreased productivity and income. Practically, this cost is higher relative to the cost related with tobacco consumption. (Kuchller & Ballenger 17-, qtd in Southworth 42).

This conviction poses a question of how the government should intervene to resolve this crisis. Logically, the federal government, society, and individuals have a role to play in the effort to resolve the trend. The following paragraph will examine one such policy focused on resolving this issue and the role of the government, society, and individuals.

Fat tax policy

Apparently, there is no rigid definition of the named policy. Nevertheless, certain proposals taxing based on food categories involving cookies, snacks, soda, candies and other related staff. No the other hand, some proposals impose taxes on discrete foods considered unhealthy based on the calorie and fat content.

For the purpose of accomplishing the expected impact on obesity, it is practical to determine the foods which increase the risk factors of obesity so that to impose tax on them.

The tax would as well cover the food substitution the consumers may make. In addition, the tax will minimize the probability of companies of reducing production of taxed food commodities while increasing of those that are untaxed.

Furthermore, a broad tax base for all unhealthy food products, ones that have been proven to increase obesity-related health cost, will not be bias on producer.

For instance a candy bar manufacture and soda manufacturers would equally be affected. Increased cost and adjustment in productivity and consumption would impact all the manufacturers of commodities that indirectly contribute to the increase in the national investment in obesity.

Thus, in regard of the relevance of a broad based tax in the mentioned domain, a fat tax can be defined as one that is implemented to all foods beverage commodities that are associated with obesity.


By gauging the impact a fat tax would have in the sense of the prospect cost and benefits, one should focus on the societal standpoint which entails the federal government and it’s the public have a standing.

This conception is supported by the conviction that residents, instead of taxpayers, suffers the burden of the national cost of obesity or perceive decrease benefits for public accessible products or services. Nevertheless, a large portion of diabetes cost is often covered by taxpayer.

Assuming the entire society has standing, the impact of a fat tax should be approached from the perspective of an individual stakeholder so as to gain knowledge of the form of cost, reimbursements, and shift may transpire.

The prospects for the analysis of the impact of fat tax would encompass consumers, private companies, including those that manufacture products liable for fat tax, insurance organizations, private health insurance organizations and health institutions, medical organ, and the U.S. government.

Because the problems of obesity determine the welfare of the stakeholders, it would be logical to expect such groups to be affected by the tax policy enforced to control obesity. Typically, the manufacturers of those targeted products would campaign forcefully against fat tax policy, while the health representatives and organs would appreciate the usefulness of the tax.

Consumer, on the other hand would take two positions; for and against, depending on their views of its impact on them as persons and as groups as well as based on their comparison of the changes accruing from tax against the status quo.

On the side of the government, there would be increase in revenue which could be used to counter the nationwide obesity-related investments, despite the ideological opinion for and against the fat tax policy. These arguments directs to the inquiry of the political credibility of a fat tax.


Comparison of the estimates of cost against the benefits of fat tax is important to determine whether this policy is realistic. Therefore more research is needed to establish the estimates for the national obesity-related cost, and the benefits in order to settle the uncertainty of fat tax implications.

Works Cited

Southworth, Lisa. The skinny on a fat tax: obesity and microeconomics. Boston, Mass: Cengage, 2003. Print.

U.S. Department of Health and Human Services. National Institutes of Health. Clinical

guidelines on the identification, evaluation, and treatment of overweight and obesity in adults. NIH Publication 98-4083. 2007. 29 January, 2011.
http://www.nhlbi.nih.gov / guidelines/obesity/ob gdlns.pdf.


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